Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would...

Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $5,000,000 and would generate annual free cash inflows of $1,100,000 per year for 7 years. Calculate the project's NPV given

needs 7%
needs 8%
needs 13%
needs 10%
percentages need to be calculated with problem..

Expert Solution

1.Net present value is solved using a financial calculator. The steps to solve on the financial calculator:

Press the CF button.
CF0= -$5,000,000. It is entered with a negative sign since it is a cash outflow.
Cash flow for each year should be entered.
Press Enter and down arrow after inputting each cash flow.
After entering the last cash flow cash flow, press the NPV button and enter the cost of capital.
Press enter after that. Press the down arrow and CPT buttons to get the net present value.

Net present value at 7% cost of capital is $928,218.34.

2.Net present value is solved using a financial calculator. The steps to solve on the financial calculator:

Press the CF button.
CF0= -$5,000,000. It is entered with a negative sign since it is a cash outflow.
Cash flow for each year should be entered.
Press Enter and down arrow after inputting each cash flow.
After entering the last cash flow cash flow, press the NPV button and enter the cost of capital.
Press enter after that. Press the down arrow and CPT buttons to get the net present value.

Net present value at 8% cost of capital is $727,007.07.

3. Net present value is solved using a financial calculator. The steps to solve on the financial calculator:

Press the CF button.
CF0= -$5,000,000. It is entered with a negative sign since it is a cash outflow.
Cash flow for each year should be entered.
Press Enter and down arrow after inputting each cash flow.
After entering the last cash flow cash flow, press the NPV button and enter the cost of capital.
Press enter after that. Press the down arrow and CPT buttons to get the net present value.

Net present value at 13% cost of capital is -$135,128.52.

4. Net present value is solved using a financial calculator. The steps to solve on the financial calculator:

Press the CF button.
CF0= -$5,000,000. It is entered with a negative sign since it is a cash outflow.
Cash flow for each year should be entered.
Press Enter and down arrow after inputting each cash flow.
After entering the last cash flow cash flow, press the NPV button and enter the cost of capital.
Press enter after that. Press the down arrow and CPT buttons to get the net present value.

Net present value at 10% cost of capital is $355,260.70.

In case of any query, kindly comment on the solution.

jeff jeffy answered 1 year ago

Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would...

Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $5,000,000 and would generate annual free cash inflows of $1,100,000 per year for 6 years. Calculate the project's NPV given: a. A required rate of return of 9 percent b. A required rate of return of 11 percent c. A required rate of return of 13 percent d. A required rate of return of 18 percent

1) Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project...

1) Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of 5,500,000 and would generate annual net cash inflows of $1,200,000 per year for 6 years. Calculate the project's NPV using a discount rate of 8 percent. If the discount rate is 8 percent, then the project's NPV is? 2 Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment...

A) A company is considering building a new factory to produce aluminum baseball bats. this project...

A) A company is considering building a new factory to produce aluminum baseball bats. this project would require an initial cash outlay of $5,500,000 and would generate annual net cash inflows of $900,000 per year for seven years. calculate the projects NPVE using a discount rate of 8%. B) The same company is considering to expand. The expidenture requires $9,500,000 on new service equipment I would generate annual net cash inflows from reduced costs of operations that equal 4 million...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $4,000,000 and would generate annual free cash inflows of $1,100,000 per year for 8 years. Calculate the project's NPV given: a. A required rate of return of 9 percent b. A required rate of return of 11 percent c. A required rate of return of 15 percent d. A required rate...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of 4,000,000 and would generate annual free cash inflows of 1,200,000 per year for 7 years. Calculate the project's NPV given: a. A required rate of return of 9 percent b. A required rate of return of 11 percent c. A required rate of return of 15 percent d. A required rate...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $6,000,000 and would generate annual free cash inflows of $1,000,000 per year for 6 years. Calculate the project's NPV given: a. A required rate of return of 9 percent _____ b. A required rate of return of 11 percent ____ c. A required rate of return of 14 percent ______ d....

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $4,000,000 and would generate annual free cash inflows of $1,200,000 per year for 8 years. Calculate the project's NPV given: a. A required rate of return of 8 percent b. A required rate of return of 11 percent c. A required rate of return of 15 percent d. A required rate...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $4,000,000 and would generate annual free cash inflows of $1,000,000 per year for 7 years. Calculate the project's NPV given: a. A required rate of return of 9 percent b. A required rate of return of 11 percent c. A required rate of return of 15 percent d. A required rate...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $6,000,000 and would generate annual free cash inflows of $1,000,000 per year for 6 years. Calculate the project's NPV given: a. A required rate of return of 8 percent b. A required rate of return of 10 percent c. A required rate of return of 14 percent d. A required rate...

ABC Company is considering the possibility of building an additional factory that would produce a new...

ABC Company is considering the possibility of building an additional factory that would produce a new addition to their product line. The company is currently considering two options. The first is a small facility that it could build at a cost of $6 million. If demand for new products is low, the company expects to receive $10 million in discounted revenues (present value of future revenues) with the small facility. On the other hand, if demand is high, it expects...

Question

Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would...

Solutions

Expert Solution

Related Solutions

Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would...

1) Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project...

A) A company is considering building a new factory to produce aluminum baseball bats. this project...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to...

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to...

ABC Company is considering the possibility of building an additional factory that would produce a new...