Unit 5 IP

Question content area top Part 1 New Process Corporation is a rapidly growing biotech company that has a required rate of return of 8​%. It plans to build a new facility in Santa Clara County. The building will take 2 years to complete. The building contractor offered New Process   • Plan​ I: Payment of $225,000 at the time of signing the contract and $4,675,000 upon completion of the building. The end of the second year is the completion date. • Plan​ II: Payment of $1,675,000 at the time of signing the contract and $1,675,000 at the end of each of the two succeeding years. • Plan​ III: Payment of $375,000 at the time of signing the contract and $1,550,000 at the end of each of the three succeeding years. Requirement 1. Using the net present value​ method, calculate the comparative cost of each of the three payment plans  a choice of three payment​ plans, as​ follows:

A B C E F G H J K 1 Function: FV, Rate; Cell referencing 2 3 Problem 10.22 - Modified Internal Rate of Return (MIRR) 4 PROBLEM 5 Morningside Bakeries recently purchased equipment at a cost of 6 $650,000. Management expects the equipment to generate cash flows of 7 $275,000 in each of the next four years. The cost of capital is 14 percent. Student Work Area Required: Provide input into cells shaded in gray in this template. Use the FV function with cell references to the Problem area in order to calculate the terminal value of cash flows. Use the Rate function with cell references to the Problem area and Student Work area to calculate the MIRR. Do not leave any portion of the formula for the functions blank - use 0's when necessary. Be sure to represent cash inflows as positive values. 8 9 PV of Costs 10 Length of Project 11 Cost of Capital 12 Annual Cash Flows 13 14 15 16 17 18 19 $ 650,000.00 4 years 14% $275,000.00 What is the terminal cash flow for this project? Terminal cash flow…

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PI A manager at Shannon's Custom Cabinets is interested in purchasing a computer, software, and peripheral equipment costing $240,000 that would allow company salespeople to demonstrate to custor finished carpet installation would appear. Using this cost, the manager has determined that the investments net present value is $126.000, Compute the investment's profitability index Note: Round your answer to one decimal point de round 4.555 to 4.63 0

Required information Learning Objective 11-04 Calculate the periodic amortization of an intangible asset. (The following information applies to the questions displayed below.] The allocation process for intangible assets is called amortization. For an intangible asset with a finite useful life, the capitalized cost less any estimated residual value must be allocated to periods in which the asset is expected to contribute to the company's revenue-generating activities. An intangible asset that is determined to have an indefinite useful life is not subject to periodic amortization. Goodwill is perhaps the most typical intangible asset with an indefinite useful life. Software development

Q. 1 purchase of equipment in the coming year. The capital budget is limited to $5,000,000 for the year. Lori Alleyne, staff analyst at McGloire's, is preparing an analysis of the three projects under consideration by Joyanne McGloire, the company's owner. McGloire Construction is analyzing its capital expenditure proposals for the A в D Project A Project B Project C 1 Projected cash outflow Net initial investment 2 3 $3 000 000 $1 500 000 $4 000 000 4 5 Projected cash inflows Year 1 $1 000 000 1 000 000 1 000 000 1 000 000 $ 400 000 $2 000 000 7 Year 2 900 000 2 000 000 8 Year 3 800 000 200 000 Year 4 100 000 10 11 Required rate of return 10% 10% 10% 1. Because the company's cash is limited, McGloire thinks the payback method should be used to choose between the capital budgeting projects. a. List two benefits and two limitations of using the payback method to choose between projects? b. Calculate the payback period for each of the three project Ignore income taxes. Using the payback…

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Problem 6-27 Calculating Project NPV With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a “surf lifestyle for the home." With limited capital, they decided to focus on surf print table and floor lamps to accent people's homes. They projected unit sales of these lamps to be 10,400 in the first year, with growth of 6 percent each year for the next five years. Production of these lamps will require $53,000 in net working capital to start. Total fixed costs are $137,000 per year, variable production costs are $20 per unit, and the units are priced at $62 each. The equipment needed to begin production will cost $595,000. The equipment will be depreciated using the straight-line method over a 5-year life and is not expected to have a salvage value. The tax rate is 24 percent and the required rate of return is 19 percent. What is the NPV of this project? (Do not round intermediate calculations and round…

Question Two a) A company has $10 million available for investment. It is considering investing in three individual investment projects. Project One Project Two Project Three Initial Investment $4 million $2 million $7 million Net present value $9 million $3 million $11 million What would be the opportunity cost of investing in Project One? b) What is the strongest argument in favor of setting a common hurdle rate across a company for all projects? c) You have been asked to determine the internal rate of return (IRR) of a project that has an initial cash outflow, followed by seven years of net cashflows. The project's net present value was +$500,000 when determined at 11% and -$500,00 when determined at 16%.

Exercise 24-22A (Algo) Using Excel to compute IRR LO P4 Following is information on two alternative investments. Beachside Resort is considering building a new pool or spa. The company requires a 10% return from its investments. Initial investment Net cash flown in Pool Spa Year 1 Year 2 IRR 41,100 57,100 81,395 91,500 66,100 Compute the internal rate of return for each of the projects using excel functions. (Round your answers to 2 decimal places.) Year 3 Year 4 Year 5 % Pool Spa $ (171,000) $ (116,000) % 33,100 51,100 67,100 73,100 25,100

Subject: accounting

1 Jlgu übja 1 Flint Systems is considering investing in production- management software that costs $630,000, has $67,000 residual value, and leads to cost savings of $1,650,000 per year over its five-year life. Calculate the average amount invested in the asset that should be used for calculating the accounting rate of return $697,000 .A $348,500 .B O $67,000 .c O $630,000 .D

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Chapter 11, Question 7

K Question 7, Problem 9-18ab Part 1 of 4 HW Score: 65.48%, 7.86 of 12 points ○ Points: 0 of 1 Save Buhler Industries is a farm implement manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightweight tractors. Buhler plans to use a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incomplete incremental free cash flow projections (in millions of dollars): Free Cash Flow ($000,000s) Revenues - Manufacturing expenses (other than depreciation) -Marketing expenses - CCA = EBIT - Taxes (35%) Unlevered net income + CCA Year 0 Years 1-9 Year 10 116.00 116.00 -36.00 -36.00 - 8.00 -8.00 ? ? ? ? ? ? ? ? ? ? -Increases in net working capital - 5.00 - 5.00 Using the indirect method requires a separate calculation of the CCA tax shield. What is the present value of the CCA tax shield? The present value of the CCA tax shield is $ million. (Round to two decimal places.)

Problem 9 Intro Apollo Learnings needs $39 million to build a new campus. The company has a target debt-equity ratio of 1. The flotation cost for new equity is 9% and the flotation cost for new debt is 4%. Part 1 What are the weighted average flotation costs as a fraction of the amount invested? 4+ decimals Submit Part 2 What is the true cost of building the new campus (in $ million)? 1+ decimals Submit

Question 6 options: Investigation and a reasonable amount of work had brought the following project to the attention of Arthur Morgan, CEO of Valentine Ventures.   The following information is presented to you:               CCA rate Building:                              4%             CCA rate Equipment:                        30%             Cost of Capital                                    12%             Corporate Tax Rate                             40%   An immediate cash outlay of $800,000 will be required to purchase vacant land.   The vacant land will be required to house the specialized building that will be constructed over the next 2 years.  The building will require an immediate down payment of $700,000 now and $1,600,000 upon completion of the building at the end of the second year. New equipment also will be placed in the building at the end of the 2nd year.  The equipment will require annual year end purchase payments of $400,000 in year one and two.  The equipment…

10:17 W W n s26-3 S26-4 Using the payback and accounting rate of return methods to make capital investment decisions Learning Objective 2 ::: Consider how Hunter Valley Snow Park Lodge could use capital budgeting to decide whether the $11,000,000 Snow Park Lodge expansion would be a good investment. Assume Hunter Valley's managers developed the following estimates concerning the expansion: Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Hunter Valley Useful life of expansion (in years) Average cash spent by each skier per day Average variable cost of serving each skier per day Cost of expansion C 056ll 70% QAA 1465/ 1480 | b 121 skiers 142 days 7 years $ 241 83 11,000,000 ||| 0 < X