Question

In: Finance

FM corporation’s new project will generate the operating cashflow by $56,200 per year for next five...

FM corporation’s new project will generate the operating cashflow by $56,200 per year for next five years. The equipment needs $238,900 of initial investment. After the investment period, the salvage value of equipment will be $67,000 after paying taxes. Assuming the required return is 15.2%, what is the NPV of this project?

$14,731.78

-$21,322.64

-$18,374.86

-$14,731.78

$17,534.09

Solutions

Expert Solution


Related Solutions

Consider the following two​ projects: Project    Year 0 Cashflow   Year 1 Cashflow    Year 2 Cashflow    Year...
Consider the following two​ projects: Project    Year 0 Cashflow   Year 1 Cashflow    Year 2 Cashflow    Year 3 Cashflow   Year 4 Cashflow Discount rate A    -100 40 50 60 N/A .15 B -147   50 70 90 5 .15 An incremental IRR of Project B over Project A is _________%. (Please round to two decimal places, write the number only without "%". i.e. if the answer is "5%", write "5.00")
A production project will generate an expected operating cash flow of $50,000 per year for 4...
A production project will generate an expected operating cash flow of $50,000 per year for 4 years (years 1 – 4). Undertaking the project will require an increase in the company’s net working capital (inventory) of $10,000 today (year 0). At the end of the project (year 4), inventory will return to the original level. The project would cost $150,000. The marginal tax rate is 35%. The weighted average cost of capital for the firm is 9%. Sketch a timeline...
Ted Corporation expects to generate free-cash flows of $200,000 per year for the next five years....
Ted Corporation expects to generate free-cash flows of $200,000 per year for the next five years. Beyond that time, free cash flows are expected to grow at a constant rate of 4 percent per year forever. If the firm's weighted average cost of capital is 15 percent, the market value of the firm's debt is $500,000, and Ted has a half million shares of stock outstanding, what is the value of Ted stock? Select one: a. $1.32 b. $1.79 c....
A new project is expected to generate an operating cash flow of $85,560 and will initially...
A new project is expected to generate an operating cash flow of $85,560 and will initially free up $10,475 in net working capital. Purchases of fixed assets costing $85,000 will be required to start up the project. What is the total cash flow for this project at Time zero? A) −$75,085 B) −$74,525 C) −$85,000 D) −$87,250 E) $62,250
2 POTENTIAL CAPITAL PROJECTS HAVE THE FOLLOWING ESTIMATED CASHFLOWS PROJECT 1 PROJECT 2 YEAR CASHFLOW CASHFLOW...
2 POTENTIAL CAPITAL PROJECTS HAVE THE FOLLOWING ESTIMATED CASHFLOWS PROJECT 1 PROJECT 2 YEAR CASHFLOW CASHFLOW 1 $95,000 $112,000 2 $150,000 $95,000 3 $10,000 $85,000 4 $12,000 $65,000 5 $45,000 $10,000 6 $198,000 $15,000 BOTH PROJECTS HAVE A COST OF $275,000. THE COST OF CAPITAL IS 11.5%. A) Calculate the payback period for each project. State if payback is acceptable for each project and state why. B) Calculate the NPV for each project. State if NPV is acceptable for each...
A proposed project will generate £150,000 in revenue a year for 20 years (starting next year),...
A proposed project will generate £150,000 in revenue a year for 20 years (starting next year), but will cause another product line to lose £60,000 in revenue a year during that time. The project will make use of 50% of an already leased warehouse with total annual rent of£50,000 (the contract does not prohibit sub-leasing). The discount rate for this project is 6%. Should the firm undertake this project if the required investment is £250,000? What is the Payback Period...
Burger Inc., is looking at a new project that will generate $312 000 in operating cash...
Burger Inc., is looking at a new project that will generate $312 000 in operating cash flows every year for four years. The project requires an investment in a system with an installment cost of $984 000 that will be depreciated straight-line to zero over the project’s four-year life. At the end of the project the system can be sold for $158 000. The system requires an initial investment in net working capital of $28 000 that will be recovered...
Question 1 A project has a cost of R1.4 million and next year will generate either...
Question 1 A project has a cost of R1.4 million and next year will generate either R2 million or R100,000 with equal probability. Assuming an 8 percent discount rate, what is the NPV of the project based on the expected cash flows next year? If the company could pay R50,000 today for an exclusive right to manufacture the project, this would allow the company to make the R1.4 million investment under conditions of generating R2 million in cash flow, and...
Company is projected to generate free cash flows of $179 million per year for the next...
Company is projected to generate free cash flows of $179 million per year for the next 3 years (FCFF1, FCFF2 and FCFF3). Thereafter, the cash flows are expected to grow at a 1.8% rate in perpetuity. The company's cost of capital is 10.9%. What is your estimate for its enterprise value? Answer in millions, rounded to one decimal place
Central Machines is considering a project that will generate cash flow of $2,304,714 per year for...
Central Machines is considering a project that will generate cash flow of $2,304,714 per year for 4 years, followed by $4,233,139 per year for 3 years, followed by $5,501,087 per year for 3 years. All cash flows will occur at the end of the year. If the cost of the project is $16,064,914, and the company's WACC is 11.7%, what is the Modified Internal Rate of Return of the project? State your answer as a percentage to 2 decimal places.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT