Question
In: Finance
Evaluate a 4-year investment opportunity in a new ice-skating rink. The purchase price is $8.4M. Shipping...
Evaluate a 4-year investment opportunity in a new ice-skating rink. The purchase price is $8.4M. Shipping installation costs are $600K. The capitalized value of the asset (i.e., its beginning book value) will be depreciated down to an end-of-life book value of 0.5 M. The anticipated selling price of machine is 1M. The ice rink is expected to provide cash sales of $14.1M per year and will require cash expenditures of $9.3M each year. Also, at t=0, working capital will rise by $420K; at termination, this change will all be reversed. The relevant marginal tax rate is 30%. The appropriate discount rate is 8%.
a) Identify all relevant cash flows and then calculate cash flows for t=0, t=1, t=2, t=3, and t=4.
b) Calculate the NPV and profitability index of the project.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
A small girl is skating around on an ice rink. Her mass is 30 kg, and...
A small girl is skating around on an ice rink. Her mass is 30
kg, and her speed is 4.0 m/s. She sees a 50 kg sled at rest on the
rink that was left there by a careless worker, and she decides to
jump onto the sled. Assume no friction between the sled and the
ice.
a. Find the child-sled system’s speed immediately after the
child jumps onto the sled.
b. Find the child-sled system’s kinetic energy immediately after...
The ceiling of an ice skating rink should have a high reflectivity to avoid condensation on...
The ceiling of an ice skating rink should have a high
reflectivity to avoid condensation on the ceiling . If condensation
forms on the ceiling , water may drip ca ice . The rink has a
diameter of 50m and a height of 12m . The temperature of the ice
and walls are -5 ° C and 15 ° C respectively . The air in the rink
is also at 15 ° C Neglect the convective losses to the outside...
Moe and Larry are ice skating at their neighborhood rink. Moe (100 kg) is heading north...
Moe and Larry are ice skating at their neighborhood rink. Moe
(100 kg) is heading north at 3
mys when he collides with Larry (75 kg) who is heading east at
2 m/s. They fall in a heap on the ice and
cling on to each other for dear life as they go skidding
across the rinK.
a lf momentum is conserved in this collision, write out the
equation or equations for momentum
conservation. Otherwise, indicate NOT CONSERVED.
b if...
You must evaluate a proposal to buy a new milling machine. The purchase price of the...
You must evaluate a proposal to buy a new milling machine. The
purchase price of the milling machine, including shipping and
installation costs, is $132,000, and the equipment will be fully
depreciated at the time of purchase. The machine would be sold
after 3 years for $78,000. The machine would require an $8,000
increase in net operating working capital (increased inventory less
increased accounts payable). There would be no effect on revenues,
but pretax labor costs would decline by $35,000...
You must evaluate a proposal to buy a new milling machine. The purchase price of the...
You must evaluate a proposal to buy a new milling machine. The
purchase price of the milling machine, including shipping and
installation costs, is $134,000, and the equipment will be fully
depreciated at the time of purchase. The machine would be sold
after 3 years for $73,000. The machine would require a $9,000
increase in net operating working capital (increased inventory less
increased accounts payable). There would be no effect on revenues,
but pretax labor costs would decline by $40,000...
You must evaluate a proposal to buy a new milling machine. The purchase price of the...
You must evaluate a proposal to buy a new milling machine. The
purchase price of the milling machine, including shipping and
installation costs, is $134,000, and the equipment will be fully
depreciated at the time of purchase. The machine would be sold
after 3 years for $73,000. The machine would require a $9,000
increase in net operating working capital (increased inventory less
increased accounts payable). There would be no effect on revenues,
but pretax labor costs would decline by $40,000...
You must evaluate a proposal to buy a new milling machine. The purchase price of the...
You must evaluate a proposal to buy a new milling machine. The
purchase price of the milling machine, including shipping and
installation costs, is $118,000, and the equipment will be fully
depreciated at the time of purchase. The machine would be sold
after 3 years for $58,000. The machine would require an $8,000
increase in net operating working capital (increased inventory less
increased accounts payable). There would be no effect on revenues,
but pretax labor costs would decline by $32,000...
You must evaluate a proposal to buy a new milling machine. The purchase price of the...
You must evaluate a proposal to buy a new milling machine. The
purchase price of the milling machine, including shipping and
installation costs, is $108,000, and the equipment will be fully
depreciated at the time of purchase. The machine would be sold
after 3 years for $52,000. The machine would require a $5,500
increase in net operating working capital (increased inventory less
increased accounts payable). There would be no effect on revenues,
but pretax labor costs would decline by $59,000...
You must evaluate a proposal to buy a new milling machine. The purchase price of the...
You must evaluate a proposal to buy a new milling machine. The
purchase price of the milling machine, including shipping and
installation costs, is $136,000, and the equipment will be fully
depreciated at the time of purchase. The machine would be sold
after 3 years for $67,000. The machine would require an $8,000
increase in net operating working capital (increased inventory less
increased accounts payable). There would be no effect on revenues,
but pretax labor costs would decline by $38,000...
You must evaluate a proposal to buy a new milling machine. The purchase price of the...
You must evaluate a proposal to buy a new milling machine. The
purchase price of the milling machine, including shipping and
installation costs, is $134,000, and the equipment will be fully
depreciated at the time of purchase. The machine would be sold
after 3 years for $91,000. The machine would require a $5,000
increase in net operating working capital (increased inventory less
increased accounts payable). There would be no effect on revenues,
but pretax labor costs would decline by $59,000...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Q. Compare and contrast Ripple-Carry Adder and Carry-Look ahead Adder 1) In a 4-bit ripple-carry adder...
- 1. How are a buffer and a NOT gate similar? 2. How are a buffer and...
- Section 9.4 Practice Problems: 2. How many CSUN students would have to be polled to determine...
- Cybersecuirty Describe the different types of firewalls that are on the market and how they differ...
- Please take time to view the video, “Was America Founded to Be Secular? “ as a...
- 7. A health psychologist knew that corporate executives in general have an average score of 80...
- Submission Guidelines This assignment may be submitted for full credit until Friday, October 4th at 11:59pm....
ADVERTISEMENT