Nobel Tech Inc. is building a new production line. The cost of the production line is $3 million in the current year and $2 million in the following year. The production line is expected to bring in cash inflow of $1.6 million in year 2, and $2 million each year from year 3 to year 7. The company uses a cost of capital of 10% on all the projects.
The IRR of the project is closest to ___________.
Group of answer choices
a. 27%
b. 24%
c. 17%
d. 18%
In: Finance
Find the labor cost to produce 40 cellphones if the time needed to produce the first cell phone is 120 hours and learning rate is 90%. Assume the labor wage is $11/hour. please work it in excel
In: Accounting
Nobel Tech Inc. is building a new production line. The cost of the production line is $3 million in the current year and $2 million in the following year. The production line is expected to bring in cash inflows of $1.6 million in year 2, and $2 million each year from year 3 to year 7. The company uses a cost of capital of 10% on all the projects.
The discounted payback period of this project is ____________.
Group of answer choices
a. 4.5 years
b. 6.5 years
c. 3.7 years
d. 5.5 years
In: Finance
A Health Research company faces a cost of borrowing of 7%. If the firm receives only the private benefits of investing in R&D, then we show its demand curve for financial capital by DPrivate, as depicted in the table below. Because there are spillover benefits, society would find it optimal to have more investment. If the firm could keep the social benefits of its investment for itself, its demand curve for financial capital would be social and it would willing to borrow more money to do so. With the data below draw the private demand curve and the social demand curve and the borrowing costs as a horizontal line. Now determine both the amount of financial capital that would be invested if the firm were only considering its private benefit and the amount that would be undertaken if the firm took into account the social benefit that would result from the research.
| Rate of Return | DPrivate (in millions) | DSocial (in millions) | Borrowing Cost |
| 3% | $92 | $104 | 7% |
| 5% | $72 | $92 | 7% |
| 7% | $52 | $82 | 7% |
| 9% | $42 | $72 | 7% |
| 11% | $32 | $64 | 7% |
In: Finance
|
Compute the NPV for Project M if the appropriate cost of capital is 7 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.) |
| Project M | ||||||
| Time: | 0 | 1 | 2 | 3 | 4 | 5 |
| Cash flow | –$2,000 | $550 | $680 | $720 | $800 | $300 |
| NPV | $ |
| Should the project be accepted or rejected? | ||||
|
In: Finance
Daily Enterprises is purchasing a $10.36 million machine. It will cost $66,800.00 to transport and install the machine. The machine has a depreciable life of five years using the straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.60 million per year along with incremental costs of $1.48 million per year. Daily’s marginal tax rate is 36.00%.
The cost of capital for the firm is 12.00%.
(answer in dollars..so convert millions to dollars)
What is the year 0 cash flow for the project?
What is the yearly cash flow from the project?
The project will run for 5 years. What is the NPV of the project at the current cost of capital?
In: Finance
Peter Johnson, the CFO of Homer Industries, Inc is trying to determine the Weighted Cost of Capital (WACC) based on two different capital structures under consideration to fund a new project. Assume the company’s tax rate is 30%.
| Component | Scenario 1 | Scenario 2 | Cost of Capital | Tax Rate |
|---|---|---|---|---|
| Debt | $5,000,000.00 | $2,000,000.00 | 8% | 30% |
| Preferred Stock | 1,200,000.00 | 2,200,000.00 | 10% | |
| Common Stock | 1,800,000.00 | 3,800,000.00 | 13% | |
| Total | $8,000,000.00 | $8,000,000.00 | ||
1-a. Complete the table below to determine the WACC for each of the two capital structure scenarios. (Enter your answer as a whole percentage rounded to 2 decimal places (e.g. .3555 should be entered as 35.55).)
1-b. Which capital structure shall Mr. Johnson choose to fund the new project?
Scenario 1
Scenario 2
Part 2
Assume the new project’s operating cash flows for the upcoming 5 years are as follows:
| Project A | |
|---|---|
| Initial Outlay | $ -8,000,000.00 |
| Inflow year 1 | 1,020,000.00 |
| Inflow year 2 | 1,850,000.00 |
| Inflow year 3 | 1,960,000.00 |
| Inflow year 4 | 2,370,000.00 |
| Inflow year 5 | 2,550,000.00 |
| WACC | ? |
2-a. What are the WACC (restated from Part 1), NPV, IRR, and payback years of this project? (Negative values should be entered with a minus sign. All answers should be entered rounded to 2 decimal places. Your answers for WACC and IRR should be whole percentages (e.g. .3555 should be entered as 35.55).)
2-b. Shall the company accept or reject this project based on the outcome using the net present value (NPV) method?
Project A should be accepted
Project A should be rejected
In: Finance
An automated inspection system purchased at a cost of $200,000 by Mega Tech Engineering and has a useful life of 7 years. The Salvage Value is expected to be zero. The system was sold after 4 years for $150,000. Determine the depreciation recapture on this equipment. Calculate the depreciation recapture using the following methods:
A) SL
B) SOYD
C) MACRS
Show full work with hand calculations as well as excel document showing how you calculated everything out so I can learn it for myself. Thank you in advance!
In: Finance
An automated inspection system purchased at a cost of $200,000 by Mega Tech Engineering and has a useful life of 7 years. The Salvage Value is expected to be zero. The system was sold after 4 years for $150,000. Determine the depreciation recapture on this equipment. Calculate the depreciation recapture using the following methods:
A) SL
B) SOYD
C) MACRS
Show full work with hand calculations as well as excel document showing how you calculated everything out so I can learn it for myself. Thank you in advance!
In: Finance
If the unit sales price is $12, the unit variable cost is $7.00 and fixed costs are $125,000; what is the,
break-even quantity in # of units? ___________________________________
Please Show steps
In: Finance