chapter 24

Consider the following project for Hand Clapper, Incorporated. The company is considering a 4-year project to manufacture clap-command garage door openers. This project requires an initial investment of $16 million that will be depreciated straight-line to zero over the project's life. An initial investment in net working capital of $1,000,000 is required to support spare parts inventory; this cost is fully recoverable whenever the project ends. The company believes it can generate $12.9 million in preţax revenues with $5.1 million in pretax operating costs. The tax rate is 25 percent and the discount rate is 13 percent. The market value of the equipment over the life of the project is as follows: Year 1234 Market Value (in millions) $14.00 11.00 8.50 1.85 a. Assuming Hand Clapper operates this project for four years, what is the NPV? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) b-1.…

Consider the following project of Hand Clapper, Incorporated. The company is considering a four-year project to manufacture clap-command garage door openers. This project requires an initial investment of $14 million that will be depreciated straight- line to zero over the project's life. An initial investment in net working capital of $590,000 is required to support spare parts inventory; this cost is fully recoverable whenever the project ends. The company believes it can generate $11.6 million in pretax revenues with $4.4 million in total pretax operating costs. The tax rate is 21 percent and the discount rate is 11 percent. The market value of the equipment over the life of the project is as follows: Year Market Value (millions) a. 1 $ 11.2 9.1 234 4.9 1.3 Assuming the company operates this project for four years, what is the NPV? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89.) b-1. Compute…

A consumer product company is considering introducing a new shaving system called DELTA-4 in the market. The company plans to manufacture 75 million units of DELTA-4 a year. The investment at time 0 that is required for building the manufacturing plant is estimated as $500 million, and the economic life of the project is assumed to be 10 years. The annual total operating expenses, including manufacturing costs and overhead, are estimated at $175 million. The salvage value that can be realized from the project is estimated at $120 million. If the company's MARR is 25%, determine the price that the company should charge for a DELTA-4 shaving system to break even.(a) $3.15(b) $4.15(c) $5.15(d)$2.80

You must analyze a potential new product --- a caulking compound that Korry Materials’ R&D people developed for use in the residential construction industry.  Korry’s marketing manager thinks they can sell 115,000 tubes per year at a price of $3.25 each for 3 years, after which the product will be obsolete.  The required equipment would cost $125,000, plus another $25,000 for shipping and installation.  Current assets (receivables and inventories) would increase by $35,000, while current liabilities (accounts payables and accruals) would rise by $15,000.  Variable costs would be 60 percent of sales revenue, fixed costs (exclusive of depreciation) would be $70,000 per year, and the fixed assets would be depreciated under MACRS with a 3-year life.  When production ceases after 3 years, the equipment should have a market value of $15,000.  Korry’s tax rate is 40 percent, and it uses a 10 percent WACC for average risk projects.   The R&D costs for the new product were $30,000, and…

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Consider an order delivery business that will be a 5-year project. The required net working capital is $6.6 million and it will be returned at the end of the life of the project. Required equipment (net capital spending) will cost $15 and it will be depreciated straight-line to 0 over the 5-year life of the project. The business will have sales of $3 million in year 1, $6 million in year 2, and $10 million in years 3, 4, and 5. Costs are 30% of sales and the tax rate is 20%. (If there is a loss at the EBIT line, assign taxes of 0 for that year and do not carry tax losses forward.) The equipment has no salvage value. Create an income statement for years 1, 2, and 3, 4, and 5 (3, 4, and 5 will have the same income statement). Use the information from the income statement to calculate the operating cash flow using EBIT + depreciation – taxes for each year. Put all cash flows (net working capital, net capital spending, and operating cash flows) on a timeline. Using total cash flows from…

please answer both correctly:

Dog Up! Franks is looking at a new sausage system with an installed cost of $715,000. This cost will be depreciated straight-line to zero over the project's 6-year life, at the end of which the sausage system can be scrapped for $97,000. The sausage system will save the firm $207,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $59,000. If the tax rate is 22 percent and the discount rate is 8 percent, what is the NPV of this project? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

Dog Up! Franks is looking at a new sausage system with an installed cost of $611,710. This cost will be depreciated straight-line to 26,157 over the project's 7-year life, at the end of which the sausage system can be scrapped for $91,339. The sausage system will save the firm $182,535 per year in pretax operating costs, and the system requires an initial investment in net working capital of $66,568. If the tax rate is 0.2 and the discount rate is 0.11, what is the total cash flow in year 7? (Make sure you enter the number with the appropriate +/- sign)

Consider a project to supply Detroit with 40,000 tons of machine screws annually forautomobile production. You will need an initial $5,600,000 investment in threadingequipment to get the project started; the project will last for 6 years. The accountingdepartment estimates that annual fixed costs will be $600,000 and that variable costsshould be $250 per ton. Further, the accounting department will depreciate the initialfixed asset investment straight-line to zero over the 6-year project life and estimate asalvage value of $450,000 after dismantling costs. The marketing department estimatesthat the automakers will let the contract at a selling price of $340 per ton. The engineeringdepartment estimates you will need an initial net working capital investment of $560,000.You require a return of 13 percent and face a marginal tax rate of 24 percent on thisproject.Suppose you’re confident about your own projections, but you’re a little unsure aboutDetroit’s actual machine screw…

Dog Up! Franks is looking at a new sausage system with an installed cost of $705,000. This cost will be depreciated straight-line to zero over the project's 6-year life, at the end of which the sausage system can be scrapped for $95,000. The sausage system will save the firm $203,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $55,000. If the tax rate is 25 percent and the discount rate is 10 percent, what is the NPV of this project? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. NPV

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Kolby's Korndogs is looking at a new sausage system with an installed cost of $695,00o. 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 $93,000. The sausage system will save the firm $199,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $51,000. If the tax rate is 23 percent and the discount rate is 8 percent, 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

Kolby's Korndogs is looking at a new sausage system with an installed cost of $655,000. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which it will have a zero market value. The sausage system will save the firm $183,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $35,000. If the tax rate is 21 percent and the discount rate is 8 percent, what is the NPV of this project?

I need help with this problem and accounting

please asnwer correctly: Your company has been approached to bid on a contract to sell 5,000 voice recognition (VR) computer keyboards per year for four years. Due to technological improvements, beyond that time they will be outdated and no sales will be possible. The equipment necessary for the production will cost $3.4 million and will be depreciated on a straight-line basis to a zero salvage value. Production will require an investment in net working capital of $395,000 to be returned at the end of the project, and the equipment can be sold for $325,000 at the end of production. Fixed costs are $595,000 per year, and variable costs are $85 per unit. In addition to the contract, you feel your company can sell 12,300, 14,600, 19,200, and 11,600 additional units to companies in other countries over the next four years, respectively, at a price of $180. This price is fixed. The tax rate is 23 percent, and the required return is 10 percent. Additionally, the president of the company…