​(New project analysis​) Garcia's Truckin' Inc. is considering the purchase of a new production machine for ​$200,000.The purchase of this machine will result in an increase in earnings before interest and taxes of ​$50,000 per year. To operate the machine​ properly, workers would have to go through a brief training session that would cost ​$7,000 after taxes. It would cost ​$4,000 to install the machine properly.​ Also, because this machine is extremely​efficient, its purchase would necessitate an increase in inventory of ​$20,000.This machine has an expected life of 10 ​years, after which it will have no salvage value.​ Finally, to purchase the new​ machine, it appears that the firm would have to borrow​ $100,000 at 12 percent interest from its local​ bank, resulting in additional interest payments of ​$12,000 per year. Assume simplified​ straight-line depreciation and that the machine is being depreciated down to​ zero, a 31 percent marginal tax​ rate, and a required rate of return of 14 percent.

a. What is the initial outlay associated with this​ project?

b. What are the annual​ after-tax cash flows associated with this project for years 1 through​ 9?

c. What is the terminal cash flow in year 10​(what is the annual​ after-tax cash flow in year 10 plus any additional cash flows associated with the termination of the​project)?

d. Should the machine be​ purchased?

Answer and show work in excel if possible

ABC Computer, Inc. wants to develop and sell a new kind of computer. This new computer is estimated to have a customer selling price of $24,600. ABC thinks they can find customers to buy 1,630 per year of this new computer. ABC now sells 1,980 units of its current computer model per year. If the new computer is introduced, sales of the current computer model will decline to 1,650 units annually. The current computer model sells for $23,000. Variable costs for both the old and new computer models are 52 percent of sales. ABC will need to buy equipment to produce the new computer and this will create an annual amount of depreciation of $1,095,000. In addition, there will be annual fixed costs of $3,225,000 related to the new computer. ABC has a tax rate of 23 percent. Calculate the amount of the annual operating cash flow for the new computer. (Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.

ABC Computer, Inc. wants to develop and sell a new kind of computer. This new computer is estimated to have a customer selling price of $24,900. ABC thinks they can find customers to buy 1,660 per year of this new computer. ABC now sells 2,010 units of its current computer model per year. If the new computer is introduced, sales of the current computer model will decline to 1,680 units annually. The current computer model sells for $23,300. Variable costs for both the old and new computer models are 55 percent of sales.   ABC will need to buy equipment to produce the new computer and this will create an annual amount of depreciation of $915,000. In addition, there will be annual fixed costs of $3,300,000 related to the new computer. ABC has a tax rate of 21 percent. Calculate the amount of the annual operating cash flow for the new computer.

1) We are creating a new card game with a new deck. Unlike the normal deck that has 13 ranks (Ace through King) and 4 Suits (hearts, diamonds, spades, and clubs), our deck will be made up of the following.

Each card will have:
i) One rank from 1 to 10.
ii) One of 9 different suits.

Hence, there are 90 cards in the deck with 10 ranks for each of the 9 different suits, and none of the cards will be face cards! So, a card rank 11 would just have an 11 on it. Hence, there is no discussion of "royal" anything since there won't be any cards that are "royalty" like King or Queen, and no face cards!

The game is played by dealing each player 5 cards from the deck. Our goal is to determine which hands would beat other hands using probability. Obviously the hands that are harder to get (i.e. are more rare) should beat hands that are easier to get.a) How many different ways are there to get any 5 card hand?
The number of ways of getting any 5 card hand is  
DO NOT USE ANY COMMAS

b)How many different ways are there to get exactly 1 pair (i.e. 2 cards with the same rank)?
The number of ways of getting exactly 1 pair is
DO NOT USE ANY COMMAS

What is the probability of being dealt exactly 1 pair?
Round your answer to 7 decimal places.


c) How many different ways are there to get exactly 2 pair (i.e. 2 different sets of 2 cards with the same rank)?
The number of ways of getting exactly 2 pair is
DO NOT USE ANY COMMAS

What is the probability of being dealt exactly 2 pair?
Round your answer to 7 decimal places.


d) How many different ways are there to get exactly 3 of a kind (i.e. 3 cards with the same rank)?
The number of ways of getting exactly 3 of a kind is
DO NOT USE ANY COMMAS

What is the probability of being dealt exactly 3 of a kind?
Round your answer to 7 decimal places.


e) How many different ways are there to get exactly 4 of a kind (i.e. 4 cards with the same rank)?
The number of ways of getting exactly 4 of a kind is
DO NOT USE ANY COMMAS

What is the probability of being dealt exactly 4 of a kind?
Round your answer to 7 decimal places.


f) How many different ways are there to get exactly 5 of a kind (i.e. 5 cards with the same rank)?
The number of ways of getting exactly 5 of a kind is  
DO NOT USE ANY COMMAS

What is the probability of being dealt exactly 5 of a kind?
Round your answer to 7 decimal places.


g) How many different ways are there to get a full house (i.e. 3 of a kind and a pair, but not all 5 cards the same rank)?
The number of ways of getting a full house is  
DO NOT USE ANY COMMAS

What is the probability of being dealt a full house?
Round your answer to 7 decimal places.


h) How many different ways are there to get a straight flush (cards go in consecutive order like 4, 5, 6, 7, 8 and all have the same suit. Also, we are assuming there is no wrapping, so you cannot have the ranks be 8, 9, 10, 1, 2)?
The number of ways of getting a straight flush is  
DO NOT USE ANY COMMAS

What is the probability of being dealt a straight flush?
Round your answer to 7 decimal places.


i) How many different ways are there to get a flush (all cards have the same suit, but they don't form a straight)?
Hint: Find all flush hands and then just subtract the number of straight flushes from your calculation above.
The number of ways of getting a flush that is not a straight flush is
DO NOT USE ANY COMMAS

What is the probability of being dealt a flush that is not a straight flush?
Round your answer to 7 decimal places.


j) How many different ways are there to get a straight that is not a straight flush (again, a straight flush has cards that go in consecutive order like 4, 5, 6, 7, 8 and all have the same suit. Also, we are assuming there is no wrapping, so you cannot have the ranks be 8, 9, 10, 1, 2)?
Hint: Find all possible straights and then just subtract the number of straight flushes from your calculation above.
The number of ways of getting a straight that is not a straight flush is  
DO NOT USE ANY COMMAS

What is the probability of being dealt a straight that is not a straight flush?
Round your answer to 7 decimal places.

Assume it costs $11,000 for a new pizza oven. You expect the new pizza oven to provide $2,000 each year in net income for 8 years. Should you invest in the pizza oven if you have a required rate of return of 12%.

-Does it seem likely the pizza oven would only last 8 years?

-What if it lasts 15 years?

Think of a new project Dollarama Inc could undertake in response to the new business environment resulting form the COVID-19 effect. A potential project should last for 5-10 years and account for no more than 10%-30% of the firm’s overall operations.This project cannot be of average risk to the firm.

Using either the pure play or the subjective approach to estimate the discount rate, describe how you would adjust the WACC to find the discount rate for this project.

Describe which components of the project’s cash flows need to be considered if you were to calculate the NPV of this project. Be as specific as you can but no numbers are required, just demonstrate that you understand all the relevant cash flows for this project.

Will this project increase or decrease the risk of the firm? Which risk, systematic or unsystematic?

Fairfax Pizza is considering buying a new oven. The new oven would be purchased today for 19,400 dollars. It would be depreciated straight-line to 1,400 dollars over 2 years. In 2 years, the oven would be sold for an after-tax cash flow of 2,200 dollars. Without the new oven, costs are expected to be 12,200 dollars in 1 year and 18,500 in 2 years. With the new oven, costs are expected to be -1,600 dollars in 1 year and 14,400 in 2 years. If the tax rate is 50 percent and the cost of capital is 7.92 percent, what is the net present value of the new oven project?

Fairfax Pizza is considering buying a new oven. The new oven would be purchased today for 17,400 dollars. It would be depreciated straight-line to 2,200 dollars over 2 years. In 2 years, the oven would be sold for an after-tax cash flow of 2,800 dollars. Without the new oven, costs are expected to be 13,700 dollars in 1 year and 15,400 in 2 years. With the new oven, costs are expected to be 3,900 dollars in 1 year and 12,300 in 2 years. If the tax rate is 50 percent and the cost of capital is 7.04 percent, what is the net present value of the new oven project?

Case Study:

A manufacturing company is evaluating two options for new equipment to introduce a new product to its suite of goods. The details for each option are provided below:

Option 1

• $65,000 for equipment with useful life of 7 years and no salvage value.
• Maintenance costs are expected to be $2,700 per year and increase by 3% in Year 6 and remain at that rate.
• Materials in Year 1 are estimated to be $15,000 but remain constant at $10,000 per year for the remaining years.
• Labor is estimated to start at $70,000 in Year 1, increasing by 3% each year after.

Revenues are estimated to be:

Option 2

• $85,000 for equipment with useful life of 7 years and a $13,000 salvage value
• Maintenance costs are expected to be $3,500 per year and increase by 3% in Year 6 and remain at that rate.
• Materials in Year 1 are estimated to be $20,000 but remain constant at $15,000 per year for the remaining years.
• Labor is estimated to start at $60,000 in Year 1, increasing by 3% each year after.

Revenues are estimated to be:

The company’s required rate of return is 8%.

Management has turned to its finance and accounting department to perform analyses and make a recommendation on which option to choose. They have requested that the four main capital budgeting calculations be done: NPV, IRR, Payback Period, and ARR for each option.

For this assignment, compute all required amounts and explain how the computations were performed. Evaluate the results for each option and explain what the results mean. Based on your analysis, recommend which option the company should pursue.