Question
In: Finance
Your corporation is considering investing in a new product line. The annual revenues (sales) for the...
Your corporation is considering investing in a new product line. The annual revenues (sales) for the new product line are expected to be $163,994.00 with variable costs equal to 50% of these sales. In addition annual fixed costs associated with this new product line are expected to be $56,720.00 . The old equipment currently has no market value. The new equipment cost $74,629.00 . The new equipment will be depreciated to zero using straight-line depreciation for the three-year life of the project. At the end of the project the equipment is expected to have a salvage value of $28,509.00 . An increase in net working capital of $66,220.00 is also required for the life of the project. The corporation has a beta of 0.804 , a tax rate of 33.52% , and a target capital structure consisting of 61.43% equity and 38.57% debt. Treasury securities have a yield of 3.43% and the expected return on the market is 12.00% . In addition, the company currently has outstanding bonds that have a yield to maturity of 8.36%.
a) What is the terminal cash flow?
b) What is the corporations cost of equity?
c) What is the WACC?
d) What is the NPV for this project?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Your corporation is considering investing in a new product line. The annual revenues (sales) for the...
Your corporation is considering investing in a new product line.
The annual revenues (sales) for the new product line are expected
to be $132,767.00 with variable costs equal to 50% of these sales.
In addition annual fixed costs associated with this new product
line are expected to be $68,969.00 . The old equipment currently
has no market value. The new equipment cost $51,167.00 . The new
equipment will be depreciated to zero using straight-line
depreciation for the three-year life of...
Your corporation is considering investing in a new product line. The annual revenues (sales) for the...
Your corporation is considering investing in a new product line.
The annual revenues (sales) for the new product line are expected
to be $235,990.00 with variable costs equal to 50% of these sales.
In addition annual fixed costs associated with this new product
line are expected to be $67,829.00 . The old equipment currently
has no market value. The new equipment cost $57,941.00 . The new
equipment will be depreciated to zero using straight-line
depreciation for the three-year life of...
Your corporation is considering investing in a new product line. The annual revenues (sales) for the...
Your corporation is considering investing in a new product line.
The annual revenues (sales) for the new product line are expected
to be $356,811.00 with variable costs equal to 50% of these sales.
In addition annual fixed costs associated with this new product
line are expected to be $59,415.00 . The old equipment currently
has no market value. The new equipment cost $74,013.00 . The new
equipment will be depreciated to zero using straight-line
depreciation for the three-year life of...
Your corporation is considering investing in a new product line. The annual revenues (sales) for the...
Your corporation is considering investing in a new product line.
The annual revenues (sales) for the new product line are expected
to be $356,811.00 with variable costs equal to 50% of these sales.
In addition annual fixed costs associated with this new product
line are expected to be $59,415.00 . The old equipment currently
has no market value. The new equipment cost $74,013.00 . The new
equipment will be depreciated to zero using straight-line
depreciation for the three-year life of...
Your corporation is considering investing in a new product line. The annual revenues (sales) for the...
Your corporation is considering investing in a new product line.
The annual revenues (sales) for the new product line are expected
to be $111,755.00 with variable costs equal to 50% of these sales.
In addition annual fixed costs associated with this new product
line are expected to be $50,141.00 . The old equipment currently
has no market value. The new equipment cost $82,433.00 . The new
equipment will be depreciated to zero using straight-line
depreciation for the three-year life of...
Q) Your corporation is considering investing in a new product line. The annual revenues (sales) for the...
Q) Your corporation is considering investing in a new product
line. The annual revenues (sales) for the new product
line are expected to be $197,582.00 with
variable costs equal to 50% of these sales. In addition
annual fixed costs associated with this new product line are
expected to be $45,786.00 . The old equipment
currently has no market value. The new equipment
cost $67,326.00 . The new equipment will be
depreciated to zero using straight-line depreciation for the
three-year life of the project. At the end of the...
Q) Your corporation is considering investing in a new product line. The annual revenues (sales) for the...
Q) Your corporation is considering investing in a new product
line. The annual revenues (sales) for the new product
line are expected to be $197,582.00 with
variable costs equal to 50% of these sales. In addition
annual fixed costs associated with this new product line are
expected to be $45,786.00 . The old equipment
currently has no market value. The new equipment
cost $67,326.00 . The new equipment will be
depreciated to zero using straight-line depreciation for the
three-year life of the project. At the end of the...
Q) Your corporation is considering investing in a new product line. The annual revenues (sales) for the...
Q) Your corporation is considering investing in a new product
line. The annual revenues (sales) for the new product
line are expected to be $239,567.00 with
variable costs equal to 50% of these sales. In addition
annual fixed costs associated with this new product line are
expected to be $47,675.00 . The old equipment
currently has no market value. The new equipment
cost $50,325.00 . The new equipment will be
depreciated to zero using straight-line depreciation for the
three-year life of the project. At the end of the...
Your corporation is considering investing in a new product line. The annual revenues for the new...
Your corporation
is considering investing in a new product line. The annual revenues
for the new product line are expected to be $306000 with variable
costs equal to 50% of these sales. In addition annual fixed costs
associated with this new product line are expected to be $59900.
The old equipment currently has no market value. The new equipment
cost $55400. The new equipment will be depreciated to zero using
straight-line depreciation for the three-year life of the project.
At...
A firm is considering investing $10 million today to start a new product line. The future...
A firm is considering investing $10 million today to start a new
product line. The future of the project is unclear however and
depends on the state of the economy. The project will last 5 years.
The yearly cash flows for the project are shown below for the
different states of the economy. What is the expected NPV for the
project if the cost of capital is 12%? (Show your work. Label $. No
decimal places required. Highlight or bold...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Based on the loanable funds theory, explain how each of the following changes should impact interest...
- research paper: each student will be responsible for writing an argumentative research paper discussion a topic...
- In java based on the classes provided finish the program per the requirements: ----------------------------------------------Class1 package cardgame;...
- Identify two cultures and analyze the nurturing process within each culture and discuss the impact the...
- Digital security is an increasing concern is the Internet age. In order to protect sensitive information...
- the challenges experienced by companies considering full application of customer retention strategy in the face of...
- Respond to the following in a minimum of 175 words: The flow of a program is...
ADVERTISEMENT