Question

In: Finance

Bridgewater Fountains is considering expanding its current line of business and has developed the following expected...

Bridgewater Fountains is considering expanding its current line of business and has developed the following expected cash flows for the project. Should this project be accepted if the required return is 9.6 percent? Why or why not?

You must calculate NPV and IRR for each problem, using the NPV and IRR functions in the Excel spreadsheet program. Provide a basic description of the answers for each problem.

Year Cash Flow
0 -487,900
1 187,200
2 229,900
3 -27,300
4 246,800

Solutions

Expert Solution


Related Solutions

A pet food company has a business objective of expanding its product line beyond its current...
A pet food company has a business objective of expanding its product line beyond its current kidney and shrimp-based cat foods. The company developed two new products, one based on chicken liver and the other based on salmon.  The company conducted an experiment to compare the two new products with its existing ones , as well as a generic beef-based product sold at a supermarket chain. For the experiment, a sample of 35 cats from the population at a local animal...
A pet food company has a business objective of expanding its product line beyond its current...
A pet food company has a business objective of expanding its product line beyond its current kidney and shrimp-based cat foods. The company developed two new products, one based on chicken liver and the other based on salmon. The company conducted an experiment to compare the two new products with its two existing ones, as well as a generic beef-based product sold at a supermarket chain. For the experiment, a sample of 50 cats from the population at a local...
A pet food company has a business objective of expanding its product line beyond its current...
A pet food company has a business objective of expanding its product line beyond its current kidney- and shrimp-based cat foots. The company developed two new products, one based on chicken liver and the other based on salmon. The company conducted an experiment to compare the two new products with its two existing ones, as well as a generic beef-based product sold in supermarket chains. For the experiment, a sample of 50 cats from the population at a local animal...
Flexible Steel of the United States is considering expanding its business in Zaire. Under current law,...
Flexible Steel of the United States is considering expanding its business in Zaire. Under current law, 100% of foreign investor cash flow from depreciation and 50% of accounting income must be retained within Zaire until the investment is 5 years old. Blocked funds may be reinvested in treasury deposits at 5% per annum, tax free, and compounded annually. Flexible Steel is contemplating a new steel plant investment as follows. All cash flows will be valued if they occur on December...
8. A pet food company has a business objective of expanding its product line beyond its...
8. A pet food company has a business objective of expanding its product line beyond its current kidney- and shrimp-based cat foots. The company developed two new products, one based on chicken liver and the other based on salmon. The company conducted an experiment to compare the two new products with its two existing ones, as well as a generic beef-based product sold in supermarket chains. For the experiment, a sample of 50 cats from the population at a local...
Company A is considering replacing its current production line. The current line has fixed cost 350,000...
Company A is considering replacing its current production line. The current line has fixed cost 350,000 per year, has variable cost 10 per unit and sells for 14 per unit. The new production line will have fixed cost of 500,000, variable cost of 9.6 per unit and sells for 16 per unit. 1. Determine the breakeven quantities for both lines. 2. Plot the two profit relations. 3. Determine the breakeven quantity between the two alternatives. Must be completed in Microsoft...
Cullumber Industries is expanding its product line and its production capacity. The costs and expected cash...
Cullumber Industries is expanding its product line and its production capacity. The costs and expected cash flows of the two independent projects are given in the following table. The firm uses a discount rate of 10.54 percent for such projects. Year Product Line Expansion Production Capacity Expansion 0 -$3,146,400 -$9,369,900 1 741,600 2,699,400 2 895,900 2,699,400 3 895,900 2,699,400 4 895,900 3,978,600 5 895,900 3,978,600 a. What are the NPVs of the two projects? (Enter negative amounts using negative sign,...
Crane Industries is expanding its product line and its production capacity. The costs and expected cash...
Crane Industries is expanding its product line and its production capacity. The costs and expected cash flows of the two independent projects are given in the following table. The firm uses a discount rate of 14.08 percent for such projects. Year Product Line Expansion Production Capacity Expansion 0 -$2,233,600 -$9,704,800 1 478,900 2,611,700 2 980,500 2,611,700 3 980,500 2,611,700 4 980,500 3,361,400 5 980,500 3,361,400 a. What are the NPVs of the two projects? (Enter negative amounts using negative sign,...
Cullumber Industries is expanding its product line and its production capacity. The costs and expected cash...
Cullumber Industries is expanding its product line and its production capacity. The costs and expected cash flows of the two independent projects are given in the following table. The firm uses a discount rate of 14.98 percent for such projects. Year Product Line Expansion Production Capacity Expansion 0 -$2,426,500 -$6,756,300 1 501,800 2,381,500 2 853,000 2,381,500 3 853,000 2,381,500 4 853,000 3,975,200 5 853,000 3,975,200 a. What are the NPVs of the two projects? b. Should both projects be accepted?...
Crane Industries is expanding its product line and its production capacity. The costs and expected cash...
Crane Industries is expanding its product line and its production capacity. The costs and expected cash flows of the two independent projects are given in the following table. The firm uses a discount rate of 14.08 percent for such projects. Year Product Line Expansion Product capacity expansion 0 -$2,233,600 -$9,704,800 1 478,900 2,611,700 2 980,500 2,611,700 3 980,500 2,611,700 4 980,500 3,361,400 5 980,500 3,361,400 a. What are the NPVs of the two projects? (Enter negative amounts using negative sign,...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT