NPV - Mutually exclusive projects Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The relevant cash flows associated with each are shown in the following table …. The firm's cost of capital is 13%.
a. Calculate the net present value (NPV) of each press.
b. Using NPV, evaluate the acceptability of each press.
c. Rank the presses from best to worst using NPV.
d. Calculate the profitability index (PI) for each press.
e. Rank the presses from best to worst using PI.
|
Machine A |
Machine B |
Machine C |
|
|
Initial investment (CF 0CF0) |
$85,400 |
$59,500 |
$129,500 |
|
Year (t) |
Cash inflows (CF Subscript tCFt) |
||
|
1 |
$17,800 |
$11,500 |
$50,200 |
|
2 |
$17,800 |
$13,500 |
$30,400 |
|
3 |
$17,800 |
$15,600 |
$19,600 |
|
4 |
$17,800 |
$18,500 |
$20,200 |
|
5 |
$17,800 |
$19,700 |
$19,500 |
|
6 |
$17,800 |
$24,500 |
$29,700 |
|
7 |
$17,800 |
— |
$39,600 |
|
8 |
$17,800 |
— |
$50,000 |
In: Accounting
Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The relevant cash flows associated with each are shown in the following table: The firm's cost of capital is 8%.
|
Machine A |
Machine B |
Machine C |
|
| Initial investment
(CF 0CF0) |
$84,500 |
$59,600 |
$130,200 |
|
Year (t) |
Cash inflows
(CF Subscript tCFt) |
||
|
1 |
$18,400 |
$11,900 |
$50,200 |
|
2 |
$18,400 |
$14,400 |
$30,100 |
|
3 |
$18,400 |
$15,800 |
$20,100 |
|
4 |
$18,400 |
$18,100 |
$19,900 |
|
5 |
$18 comma 40018,400 |
$20 comma 10020,100 |
$20,300 |
|
6 |
$18,400 |
$25,000 |
$30,200 |
|
7 |
$18,400 |
$39,500 |
|
|
8 |
$18,400 |
l |
$49500 |
a. Calculate the net present value (NPV) of each press.
b. Using NPV, evaluate the acceptability of each press.
c. Rank the presses from best to worst using NPV.
d. Calculate the profitability index (PI) for each press.
e. Rank the presses from best to worst using PI.
In: Finance
Massey Machine Shop is considering a four-year project to improve its production efficiency. Six months ago, it contracted with Dr. Wright to provide a thorough study of whether there was a need for this four-year efficiency project. The report was delivered one month ago and it’s cost was $30,000. The report suggests that the company should go ahead with the project subject to Massey’s financial analysis. Buying a new machine press for $450,000 is estimated to result in $120,000 in annual pretax cost savings. The press falls in the MACRS five-year class and it will have a salvage value at the end of the project of $85,000. At time 0, the press will also require an additional investment in inventory of $9,000. Meanwhile, the accounts payable will increase by $3000. Every other current accounts remain the same. If the company’s tax rate is 20% and the discount rate is 12%, should the company accept the project? The MACRS schedule is as follows:
Year 5-year Class 1 at 20%, 2 at 32%, 3 at 19.2%, 4 at 11.52%, 5 at 11.52%, 6 at 5.76%
In: Finance
QUESTION 1
ABC Inc, a publishing company is considering investing in a new
press. For the purpose of
your valuation, limit the project’s life to 5 years. The press will
cost $1’000’000, will required
additional $20’000 in installation fees to bring it to working
condition, will have a useful life
of 5 years, salvage value of $100’000, will be depreciated on
straight-line basis and sold at
the end of project’s life for an estimated value of $300’000. The
press will allow for an
increase in production capacity and thus is expected to increase
annual revenue by
$500’000. Additional operating expenses related to the higher
volume of production are
estimated to equal $78’000 per year. Net working capital
requirements are $55’000, which
are mostly related to the increase in inventory and are expected to
be depleted by the end
of project’s life. Tax rate is 35%. Assume that you were able to
compute the firm’s WACC
and it is equal 12%. Considering that this project would be an
average risk project, meaning
that the computed WACC is applicable, find (simple) payback,
discounted payback, IRR, and
NPV for this project.
In: Finance
NPVlong dash—Mutually exclusive projects: Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The relevant cash flows associated with each are shown in the following table. The firm's cost of capital is 13%.
a. Calculate the net present value(NPV) of each press.
b. Using NPV, evaluate the acceptability of each press.
c. Rank the presses from best to worst using NPV.
d. Calculate the profitability index (PI) for each press.
e. Rank the presses from best to worst using PI.
|
Machine A |
Machine B |
Machine C |
|
| Initial investment
(CF 0CF0) |
$84,600 |
$60,500 |
$130,000 |
|
Year (t) |
Cash inflows
(CF Subscript tCFt) |
||
|
1 |
$18,200 |
$11,600 |
$50,400 |
|
2 |
$18,200 |
$13,500 |
$30,000 |
|
3 |
$18,200 |
$15,700 |
$19,500 |
|
4 |
$18,200 |
$18,100 |
$19,600 |
|
5 |
$18,200 |
$20,400 |
$19,800 |
|
6 |
$18,200 |
$24,700 |
$29,800 |
|
7 |
$18,200 |
$40,200 |
|
|
8 |
$18,200 |
$50,200 |
|
In: Accounting
NPV—Mutually
exclusive projects Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The relevant cash flows associated with each are shown in the following table:
| Machine A | Machine B | Machine C | |
| Initial investment | $85,500 | $59,700 | $129,600 |
| Year | |||
| 1 | $18,300 | $11,600 | $49,900 |
| 2 | $18,300 | $14,400 | $30,500 |
| 3 | $18,300 | $16,000 | $20,000 |
| 4 | $18,300 | $17,900 | $20,400 |
| 5 | $18,300 | $19,600 | $19,700 |
| 6 | $18,300 | $24,500 | $29,600 |
| 7 | $18,300 | $0 | $39,800 |
| 8 | $18,300 | $0 | $49,600 |
. The firm's cost of capital is 12%.
a. Calculate the net present value (NPV) of each press.
b. Using NPV, evaluate the acceptability of each press.
c. Rank the presses from best to worst using NPV.
d. Calculate the profitability index (PI) for each press.
e. Rank the presses from best to worst using PI.
In: Finance
You are a Genetic Counsellor/Researcher working in the Medical Genetics Unit of a hospital. A proband has been referred to you from one of the clinical consultants in the metabolic unit. It appears to be a novel Mendelian disease and it is your job to further investigate the genetic basis of the condition.
How would you determine if this mutation arose once or multiple times if given access to the DNA from different pedigrees with this disease?
In: Biology
Imagine that you are a scientist that wants to isolate the gene that codes for Succinate Dehydrogenase (an important Citric Acid Cycle enzyme) from a novel plant that produces lettuce. Knowing concepts in Genetics and bringing in biotechnology, how would you go about cloning and further sequencing this gene using Bioinformatics? Please list in sequential order how you would go about going forward with this experiment
In: Biology
Using the below articles:
In two or three sentences identify a psychological perspective and explain how it relates to the problem of childhood obesity- remember to cite your sources.
https://www.ncbi.nlm.nih.gov/pubmed/15140846
http://ottawacitizen.com/news/local-news/a-novel-approach-to-childhood-obesity-treat-the-parents
https://www.centerforhealthjournalism.org/2015/04/10/tackling-childhood-obesity-effective-programs-focus-family
In: Psychology
I am having trouble with all three parts.
A shelf contains 3 novels, 2 books of poetry, and 1 dictionary. We select 2 books at random in turn without replacement. Define events A and N by: A = “the dictionary is selected”, N = “at least one novel is selected”. Show your work to find each of the following:
(a) P(A' )
(b) P(N)
(c) P(A ∩ N).
In: Math