Question

In: Finance

Jasper Metals is considering installing a new molding machine which is expected to produce operating cash...

Jasper Metals is considering installing a new molding machine which is expected to produce operating cash flows of $64,000 per year for 8 years. At the beginning of the project, inventory will decrease by $23,200, accounts receivables will increase by $24,600, and accounts payable will increase by $17,700. At the end of the project, net working capital will return to the level it was prior to undertaking the new project. The initial cost of the molding machine is $276,000. The equipment will be depreciated straight-line to a zero book value over the life of the project. The equipment will be salvaged at the end of the project creating an aftertax cash flow of $66,000. What is the net present value of this project given a required return of 10.9 percent?

Solutions

Expert Solution

Net Working Capital Investment = -$23,200 + $24,600 + $17,700 = $19,100

Net present Value of the Project is $94,128.12

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Jasper Metals is considering installing a new molding machine which is expected to produce operating cash...
Jasper Metals is considering installing a new molding machine which is expected to produce operating cash flows of $74,000 per year for 9 years. At the beginning of the project, inventory will decrease by $35,200, accounts receivables will increase by $30,600, and accounts payable will increase by $22,200. At the end of the project, net working capital will return to the level it was prior to undertaking the new project. The initial cost of the molding machine is $321,000. The...
Jasper Metals is considering installing a new molding machine which is expected to produce operating cash...
Jasper Metals is considering installing a new molding machine which is expected to produce operating cash flows of $55,000 per year for 7 years. At the beginning of the project, inventory will decrease by $16,000, accounts receivables will increase by $21,000, and accounts payable will increase by $15,000. At the end of the project, net working capital will return to the level it was prior to undertaking the new project. The initial cost of the molding machine is $249,000. The...
A new molding machine is expected to produce operating cash flows of $109,000 a year for...
A new molding machine is expected to produce operating cash flows of $109,000 a year for 4 years. At the beginning of the project, inventory will decrease by $8,700, accounts receivables will increase by $9,500, and accounts payable will decrease by $5,200. All net working capital will be recovered at the end of the project. The initial cost of the molding machine is $319,000. The equipment will be depreciated straight-line to a zero book value over the life of the...
You are operating an old machine that is expected to produce a cash flow 0f $5,000...
You are operating an old machine that is expected to produce a cash flow 0f $5,000 in each of the next 3 years before it fails. You can replace it now with a new machine that costs $20,000 but is much ore efficient and will provide a cash flow of $10,000 a year for 4 years. Calculate the equivalent annual cost of the new machine if the discount rate is 15% (Do not round intermediate calculations. Round your answer to...
The manager of a juice bottling factory is considering installing a new juice bottling machine which...
The manager of a juice bottling factory is considering installing a new juice bottling machine which she hopes will reduce the amount of variation in the volumes of juice dispensed into 8-fluid-ounce bottles. Random samples of 10 bottles filled by the old machine and 9 bottles filled by the new machine yielded the following volumes of juice (in fluid ounces). Old machine: 8.2, 8.0, 7.9, 7.9, 8.5, 7.9, 8.1,8.1, 8.2, 7.9 New machine: 8.0, 8.1, 8.0, 8.1, 7.9, 8.0, 7.9,...
Company A is considering the purchase of a new machine. The new machine is not expected...
Company A is considering the purchase of a new machine. The new machine is not expected to affect revenues, but pretax operating expenses will be reduced by $12,700 per year for 10 years. The old machine is now 5 years old, with 10 years of its scheduled life remaining. It was originally purchased for $61,500 and has been depreciated by the straight-line method. The old machine can be sold for $20,700 today The new machine will be depreciated by the...
A new machine that costs $80,800 is expected to save annual cash operating costs of $20,000...
A new machine that costs $80,800 is expected to save annual cash operating costs of $20,000 over each of the next seven years. The machine's internal rate of return is (see choices below the present value tables): Present Value of $1 Periods 4% 6% 8% 10% 12% 14% 16% 1 .962 .943 .926 .909 .893 .877 .862 2 .925 .890 .857 .826 .797 .769 .743 3 .889 .840 .794 .751 .712 .675 .641 4 .855 .792 .735 .683 .636 .592...
Scenario 2: Hunter Molding Machine (Machine Guarding) While operating a Hunter molding machine, it is necessary...
Scenario 2: Hunter Molding Machine (Machine Guarding) While operating a Hunter molding machine, it is necessary for a single operator to reach inside the machine to adjust the pattern or blow it off to ensure that it is free of particles or other debris that will create deformed parts. This function is conducted once every 75 minutes, 8.5 hours per day. The molding pattern is placed on the holder by the machine, which then automatically rotates the pattern 180 degrees...
"The A.M.I. Company is considering installing a new process machine for the firm's manufacturing facility. The...
"The A.M.I. Company is considering installing a new process machine for the firm's manufacturing facility. The machine costs $555,000 installed, will generate additional revenue of $70,000 per year, and will save $69,000 per year in labor and material costs. The machine will be financed by a $223,000 bank loan repayable in three equal annual installments with a 6% interest rate. The machine will be depreciated using seven-year MACRS. The useful life of the machine is 10 years when the machine...
"The A.M.I. Company is considering installing a new process machine for the firm's manufacturing facility. The...
"The A.M.I. Company is considering installing a new process machine for the firm's manufacturing facility. The machine costs $540,000 installed, will generate additional revenue of $71,000 per year, and will save $64,000 per year in labor and material costs. The machine will be financed by a $217,000 bank loan repayable in three equal annual installments with a 5% interest rate. The machine will be depreciated using seven-year MACRS. The useful life of the machine is 10 years when the machine...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT