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12 nts 3 03:38:35 eBook Hint Print eferences Your firm is contemplating the purchase of a new $580,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $92,000 at the end of that time. You will be able to reduce working capital by $117,000 (this is a one-time reduction). The tax rate is 24 percent and the required return on the project is 12 percent. If the pretax cost savings are $150,000 per year, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV Will you accept or reject the project? Reject Accept If the pretax cost savings are $115,000 per year, what is the NPV of this project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

QUESTION 3 Project Year 0 Year 1 Year 2 Year 3 A -$200 $100 $100 $100 B -$300 $175 $125 $125 Based on the payback rule, which of the following is false? With a payback cutoff of 1.5 years, both projects are unacceptable. You would be indifferent between the two projects. With a payback cutoff of three years, both projects are acceptable. With a payback cutoff of one year, neither project is acceptable. Since both projects pay back, the NPV of both must be positive.

Question 33 Brandt Enterprises is considering a new project that has a cost of $1,000,000, and the CFO set up the following simple decision tree to show its three most likely scenarios. The firm could arrange with its work force and suppliers to cease operations at the end of Year 1 should it choose to do so, but to obtain this abandonment option, it would have to make a payment to those parties. How much is the option to abandon worth to the firm?   a. $64.08   b. $55.08   c. $67.29   d. $61.03   e. $57.98

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Problem 11-19 Project Analysis [LO1, 2, 3, 4] You are considering a new product launch. The project will cost $2,375,000, have a four- year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 340 units per year; price per unit will be $19,900, variable cost per unit will be $14,150, and fixed costs will be $730,000 per year. The required return on the project is 11 percent, and the relevant tax rate is 22 percent. a. Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within 10 percent. What are the upper and lower bounds for these projections? What is the base-case NPV? What are the best-case and worst-case scenarios? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your NPV answers to 2 decimal places, e.g., 32.16. Round your other answers to the nearest whole number, e.g. 32.) Scenario Base Best Worst Unit Sales…

Project Investment 22A 23A 24A Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Iggy Company uses the straight-line method depreciation. Click here to view PV table. (a) Project Determine the internal rate of return for each project. (Round answers 0 decimal places, e.g. 10. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Internal Rate of Return 22A $240,600 271,400 284,100 23A Annual Life of Income Project $17,220 6 years 21,000 9 years 15,700 7 years 24A % % % (b) If Iggy Company's required rate of return is 11%, which projects are acceptable? The following project(s) are acceptable

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Unit VIII Question 18 part a

question 18   Nirvana Chip Designs has finished designing its next generation of​ chips, the XJ5000 series and is getting ready to start production. As the analyst on the​ project, you are required to prepare pro forma free cash flows. Which of the following are relevant to your​ analysis? a. Design cost for the chips b. Potential lost sales of the XJ4000 chips c. Proportional cost of the corporate jet lease d.​ Start-up investment in raw materials e. Upgrades to the chip fabrication facility required if the chip is produced f. Market research done to guide the development of the new chip g. Market value of land and buildings where new chip will be produced     1. Design cost for the chips.  ​(Select the best choice​ below.) A. This is relevant because it is an investment in working capital. B. This is relevant as it represents cannibalization of existing sales. C. This is irrelevant because it is a sunk cost. D. This is irrelevant as it represents existing overhead.…

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Question 10 of 17 View Policies Current Attempt in Progress Wildhorse Solutions, Inc., has just invested $4,869,000 in new equipment. The firm uses a payback period criteria of rejecting any project that takes more than four years to recover its costs. Management anticipates cash flows of $746,600, $745,400, $874,300, $1,556,400, $3,094,500, and $1,830,100 over the next six years. (Round answer to 2 decimal places, e.g. 15.25.) What is the payback period of this investment? Payback period is years. Should Wildhorse Solutions, Inc. go ahead with this project? The firm * the project. eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer MacBook Air