Question

In: Finance

Project 1 Calculations must be done in Excel Fergy Smith, the financial advisor to Uncovered Car...

Project 1 Calculations must be done in Excel
Fergy Smith, the financial advisor to Uncovered Car Rentals is evaluating the following types of cars to
add to the fleet:-
Topless:- A sporty convertible with a cost of $100,000 and a useful life of 5 years. It will produce rental income of $60,000 per year and operating costs of $10,000 per year. A major service is required after 3 years costing $15,000. A salvage value of $25,000 is expected after 5 Years. The required return is 10%.
Canopy:- A rugged off road vehicle costing $150,000 but with an expected useful life of only 3 years, due to the harsh conditions. It will produce rental income of $100,000 per year and operating costs of $20,000 per year. A major service is required after 2 years costing $10,000. A salvage value of $50,000 is expected after 3 Years. The required rate of return is 12%.
Income tax can be ignored.
Required
(1) The NPV’s of the two cars.
(2) An analysis of the two cars assuming they are mutually exclusive and can be repeated indefinitely.

Solutions

Expert Solution


Related Solutions

Project 1 Calculations must be done in Excel As the financial advisor to Upmarket Car Rentals...
Project 1 Calculations must be done in Excel As the financial advisor to Upmarket Car Rentals you are evaluating the following types of cars to add to the fleet: - 1. Speedster: - A sporty convertible with a cost of $120,000 and a useful life of 4 years. It will produce rental income of $80,000 per year and operating costs of $15,000 per year. A major service is required after 2 years costing $20,000. A salvage value of $30,000 is...
Calculations must be done in Excel As the financial advisor to Upmarket Car Rentals you are...
Calculations must be done in Excel As the financial advisor to Upmarket Car Rentals you are evaluating the following types of cars to add to the fleet: - Speedster: - A sporty convertible with a cost of $120,000 and a useful life of 4 years. It will produce rental income of $80,000 per year and operating costs of $15,000 per year. A major service is required after 2 years costing $20,000. A salvage value of $30,000 is expected after 4...
Project 1 Calculations must be done in Excel Polycorp is considering an investment in new plant...
Project 1 Calculations must be done in Excel Polycorp is considering an investment in new plant of $3 million. The project will be partially financed by a loan of $2 million, which will be repaid over five years in equal annual end of year instalments at a rate of 6.5 percent pa. The rest of the project will be financed by equity. Assume straight-line depreciation over a five-year life, and no taxes. The project’s cash flows before loan repayments and...
Project 2 Calculations must be done in Excel – You must create your own spreadsheet (do...
Project 2 Calculations must be done in Excel – You must create your own spreadsheet (do not copy and paste someone else’s). This question should be done using Method 1 as outlined in lecture 6 (i.e. Tax Effects, then Cash Flows then NPV) As the financial advisor to All Star Manufacturing you are evaluating the following new investment in a manufacturing project: - The project has a useful life of 12 years. Land costs $6m and is estimated to have...
Calculations must be done in Excel – You must create your own spreadsheet do not copy...
Calculations must be done in Excel – You must create your own spreadsheet do not copy and paste someone else’s. Polycorp Limited Steel Division is considering a proposal to purchase a new machine to manufacture a new product for a potential three year contract. The new machine will cost $1.9 million. The machine has an estimated life of three years for accounting and taxation purposes. Installation will cost a further $120,000. The contract will not continue beyond three years and...
Calculations must be done in Excel - Using the capital budgeting method of; Tax Effects, then...
Calculations must be done in Excel - Using the capital budgeting method of; Tax Effects, then Cash flows, then NPV. As the financial advisor to All Star Manufacturing you are evaluating the following new investment in a manufacturing project: - The project has a useful life of 12 years. Land costs $6m and is estimated to have a resale value of $10m at the completion of the project. Buildings cost $5m, with allowable depreciation of 10% pa reducing balance and...
Calculations must be done in Excel Polycorp is considering an investment in new plant of $3.2...
Calculations must be done in Excel Polycorp is considering an investment in new plant of $3.2 million. The project will be partially financed with a loan of $2,000,000 which will be repaid over the next five years in equal annual end of year instalments at a rate of 6.20 percent pa. The rest of the project will be financed by equity. Assume straight-line depreciation over a five-year life, and no taxes. The project’s cash flows before loan repayments and interest...
NEEDS TO BE DONE IN EXCEL WITH CALCULATIONS. An ARM for 100,000 is made at the...
NEEDS TO BE DONE IN EXCEL WITH CALCULATIONS. An ARM for 100,000 is made at the time when the expected start rate is 5 percent. The Loan will be made with a teaser rate of 2 percent for the first year, after which the rate will be reset. The loan is fully amortizing, has a maturity of 25 years, and payments will be made monthly. a. What will be the payments during the first year? b. Assuming that the reset...
NEEDS TO BE DONE IN EXCEL WITH CALCULATIONS. An investor has $60,000 to invest in a...
NEEDS TO BE DONE IN EXCEL WITH CALCULATIONS. An investor has $60,000 to invest in a 280,000 property. He can obtain either a $220,000 loan at 9.5 percent for 20 years or a $180,000 loan at 9 percent for 20 years and second mortgage for $40,000 at 13 percent for 20 years. All loans require monthly payments and are fully amortizing a. Which alternative should the borrower choose, assuming he will own the property for the full loan term? b....
The Ratio Calculations should be done in a table in Excel and included with your submission....
The Ratio Calculations should be done in a table in Excel and included with your submission. The following ratios should be included for Pier 1 for 2 years: calculate these ratios below is a link to 10-K form Working Capital Current Ratio Total Debt to Total Equity Ratio Times Interest Earned RNOA ROCE Show calculations for pier 1 https://investors.pier1.com/financial-information/annual-reports
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT