Question

In: Finance

Anopportunity has presented itself to you and one of your classmates. Your opportunity is to enter...

Anopportunity has presented itself to you and one of your classmates. Your opportunity is to enter the fast-growing craft beer industry. Your projected sales in the first year is 8300 kegs. Your projected growth rate is 5 percent. Entering the business will require $35,000 of net working capital. Total fixed costs are $95,000. Variable production costs are $36 per keg and keg sales are priced at $57 each. The equipment to begin production is $175,000. The equipment will be depreciated using straight line depreciation over a five year life and has no salvage value. The tax rate is 35 percent and the required return is 26 percent. What is the NPV of the project and should you pursue the project?

-$6,728.10 No, do not take the project.

$12,273.57 Yes, take the project.

-$39,007.72 No, do not take the project.

-$2,082.17 No, do not take the project.

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

A business opportunity has presented itself to you and one of your classmates. Your opportunity is...
A business opportunity has presented itself to you and one of your classmates. Your opportunity is to enter the fast-growing craft beer industry. Your projected sales in the first year is 7500 kegs. Your projected growth rate is 5 percent. Entering the business will require $35,000 of net working capital. Total fixed costs are $95,000. Variable production costs are $32 per keg and keg sales are priced at $56 each. The equipment to begin production is $175,000. The equipment will...
A business opportunity has presented itself to you and one of your classmates. Your opportunity is...
A business opportunity has presented itself to you and one of your classmates. Your opportunity is to enter the fast growing craft beer industry. Your projected sales in the first year is 7500 kegs. Your projected growth rate is 8 percent. Entering the business will require $35,000 of net working capital. Total fixed costs are $95,000. Variable production costs are $30 per keg and keg sales are priced at $55 each. The equipment to begin production is $175,000. The equipment...
A business opportunity has presented itself to you and one of your classmates. Your opportunity is...
A business opportunity has presented itself to you and one of your classmates. Your opportunity is to enter the fast-growing craft beer industry. Your projected sales in the first year is 8300 kegs. Your projected growth rate is 5 percent. Entering the business will require $35,000 of net working capital. Total fixed costs are $95,000. Variable production costs are $36 per keg and keg sales are priced at $57 each. The equipment to begin production is $175,000. The equipment will...
You are planning to study for your statistics examination with a group of classmates, one of...
You are planning to study for your statistics examination with a group of classmates, one of whom you particularly want to impress. This individual has volunteered to use statistical software to get the needed summary information, tables, and charts for a data set containing several numerical and categorical variables assigned by the professor for study purposes. This person contacts you about the printouts and exclaims: “I’ve got it all – the means, the medians, the standard deviations, the boxplots, the...
• What is your window of opportunity to enter the recreational marijuana market
• What is your window of opportunity to enter the recreational marijuana market
Imagine the following scenario: You are taking the evidence-based practice course and one of your classmates...
Imagine the following scenario: You are taking the evidence-based practice course and one of your classmates shares an EBP project draft with you. You notice that some of the research has not been cited correctly or even at all. When you approach your classmate, the response is that "no one will notice and it is not a big deal anyway." What are your next steps in speaking with your classmate? Consider how this could reflect on the credibility and integrity...
You are presented with an investment opportunity that will give you the following stream of cash...
You are presented with an investment opportunity that will give you the following stream of cash flows: nothing for the next 5 years; at the following year, an amount of $3,000 per year until year 10; and then an amount of $8,000 per year until year 25. If your required rate of return (APR) is 12% compounded annually, what is the present value today of these cash flows?
You are presented with an investment opportunity that will give you the following stream of cash...
You are presented with an investment opportunity that will give you the following stream of cash flows: nothing for the next 2 years; at the following year, an amount of $5,000 per year until year 14; and then an amount of $8,000 per year until year 22. If your required rate of return (APR) is 9% compounded annually, what is the present value today of these cash flows?
In this discussion, you will be creating your own application problems that your fellow classmates will...
In this discussion, you will be creating your own application problems that your fellow classmates will solve using systems of linear equations. Let’s first look at an example. When creating an application problem, it is helpful to begin with the solution to the problem. So, for example, if you start with the solutions (a rectangular garden with width = 8 ft, length = 10 ft), then you must find two ways these quantities relate to each other and give this...
In this discussion thread you will share a summary of your proposal project with your classmates....
In this discussion thread you will share a summary of your proposal project with your classmates. Based on what you read on page 171, “What Readers Expect from a Summary,” write a summary of your proposal project. Include brief background information about your topic, what you have learned from your review of literature, what research methods you used, your findings, and your conclusion (or what you assume the results will show). Proposal project is police brutality
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT