Kolby’s Korndogs is looking at a new sausage system with an installed cost of $665,000. This cost will be depreciated straight-line to zero over the project’s 5-year life, at the end of which the sausage system can be scrapped for $87,000. The sausage system will save the firm $187,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $39,000. If the tax rate is 22 percent and the discount rate is 10 percent, what is the NPV of this project?

You are considering a project that will cost $50,000 to set up, and will pay out $18,000 1, 2, 3

and 4 years from today. The unlevered beta for this project is 1.2, the risk free rate is 6.5%, and

the expected return on the S&P 500 is 15%. Corporate taxes are 25%.

a.

What is the unlevered cost of equity for this project?

b. What is the NPV of this project if you finance with all equity?

c.

You are considering borrowing $30,000 to finance this project, with repayment in 4

years. You could normally borrow at 7.5%. The Nebraska state government has offered

to lend you the money at 6%. What is the adjusted present value of this project if you

take the subsidized loan?

You will be writing a program to calculate the cost of an online movie order.

Write a program that calculates and prints the cost of viewing something through the CNR Cable Company’s on demand. The company offers three levels of viewing: TV, Movies that are New Releases and Movies (not considered new releases). Its rates vary depending on what is to be viewed.

The rates are computed as follows:

TV: Free

New Releases: 6.99

Movies (not new releases): The cost is based on the year the movie was released before 1960: 2.99 1960 – 1979: 3.99 1980 – 1999: 4.99 after 2000: 5.99

Your program should prompt the user to enter the title of the item to be viewed (string) and a type of viewing code (type char). A type code of t or T means TV; a type code of n or N means new release; a type code of m or M means a non-new release Movie. Treat any other character as an error. Your program should output the title, type of viewing, and the amount due from the viewer, formatted neatly. When printing the type of viewing you must print the description (i.e. New Release) NOT the code (i.e. n). For the non-new release movies, the customer must give the year the movie was released. Therefore, to calculate the bill, you must ask the user to input the year. The program MUST utilize functions and MUST contain at least one if statement and at least one switch statement. Functions should be written for the following tasks:  Output instructions  Prompt for and accept the movie name  Prompt for and accept the movie type (single character code)  Calculate the charge  Output the movie name, type description, and total charge

2. Muncy, Inc., is looking to add a new machine at a cost of $4,133,250. The company expects this equipment will lead to cash flows of $815,322, $863,275, $937,250, $1,017,112, $1,212,960, and $1,225,000 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment? Round to two decimal places.

3.

An investment of $83 generates after-tax cash flows of $38.00 in Year 1, $66.00 in Year 2, and $127.00 in Year 3. The required rate of return is 20 percent. The net present value is

Round to two decimal places.

4. McKenna Sports Authority is getting ready to produce a new line of gold clubs by investing $1.85 million. The investment will result in additional cash flows of $525,000, $817,500, and $1,245,000 over the next three years. What is the payback period for this project? Round to four decimal places.

5.

Monroe, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project?

Year Project

0 ($11,368,000)

1 $ 2,157,589

2 $ 3,787,552

3 $  3,200,650

4 $ 4,115,899

5 $ 4,556,424

Round to two decimal places.

A firm can lease a truck for 4 years at a cost of $41,000 annually. It can instead buy a truck at a cost of $91,000, with annual maintenance expenses of $21,000. The truck will be sold at the end of 4 years for $31,000. a. Calculate present value if the discount rate is 10%

On January 1, 2018, A Co. purchased a machine at a cost of $84,000. The machine is expected to last 5 years and has a residual value of $14,000.

Required:

1. Compute depreciation for the five year periods ending December 31 using the straight-line, sum-of-the-years digits and DDB method.

2. The machine is sold on January 1,2020 for $40,000. Compute the gain or loss for each method.

3. Consider a project having the following activities, time, and cost:

                                                  Normal       Normal       Crash         Crash      Maximum

                        Immediate          Time         Cost         Time          Cost         Time

      Activity      Predecessors      (weeks)          ($)          (weeks)          ($)       Reduced

            a               none                  4            3,000             2            5,000            2

            b               a                        5            5,000             3            8,000            2

            c               a                        4            7,000             4            7,000            0

            d               b                        4            6,000             2            8,000            2

            e               c,d                     8            4,000             6            8,000            2

            f               c                        3            4,000             2            9,000            1

            g               e,f                      4            2,000             2            7,000            2

Assume partial crashing (not all maximum crashing time has to be used) is available.

1. Draw the network diagram. How long does project take using normal time?
2. Which activities should be crashed to reduce the completion time of the project by two weeks? How much is the additional cost? Show all work.

1. A firm with a current value (cost) of $800 and will return $1,000 next year. The firm also has a potential project that costs $500 and will return $550 next year, but the firm does not have the money to invest and must raise it from outside investors. However, outside investors mistakenly believe the firm will be worth $820 in one year without the project and $13,030 with the project. For simplicity, assume a zero discount rate. Does the project have a positive NPV? Acting on behalf of existing shareholders, should you take the project?

use the web to identify the cost of hardware, software, and networking conponents for an RFID sysyem for company?

Comparing Three The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life.Depreciation Methods

Waylander Coatings Company purchased waterproofing equipment on January 6 for $661,800. The equipment was expected to have a useful life of four years, or 8,800 operating hours, and a The estimated value of a fixed asset at the end of its useful life.residual value of $54,600. The equipment was used for 3,300 hours during Year 1, 2,700 hours in Year 2, 1,600 hours in Year 3, and 1,200 hours in Year 4.

Required:

1. Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the A method of depreciation that provides for equal periodic depreciation expense over the estimated life of a fixed asset.straight-line method, (b) the A method of depreciation that provides for depreciation expense based on the expected productive capacity of a fixed asset.units-of-output method, and (c) the A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life.double-declining-balance method. Also determine the total depreciation expense for the four years by each method.

Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.