Construction Loan Finance

Should WMM lease or construct their own production facility Option 1: Construct Costs to incur: Actual expenditure towards buying land,  construct building and getting ready for use                       $ 500,000Taxes, insurance, and repairs (per year)                                 $ 20,000Intended years of use                                                                          18Projected market value in 18 years                                     $ 1,000,000 Budgeted maximum expenditure towards buying land,  construction of building and getting ready for use.            $ 500,000Remainder in four payments of;                                             $ 175,000Option 2:                                                                                           LeaseIntended years of use                                                                         18First lease payment due now                                                  $ 100,000Rest of the lease payments…

Initial Equipment $65,000 Project Life 3 Years Sales $55,000 Variable Costs $25,000 Fixed Costs $ 10,000 Tax rate 26% Cost of Capital 10% Ending Book Value $10,000 Sales Price at Year 3 $5,000 Net Working Capital $10,000 CALCULATE THE INITIAL COSTS, CALCULATE THE OPERATING CASH FLOW, CALCULATE THE TERMINAL NON OPERATING CASH FLOW, CALCULATE THE NPV. please show your work and formulus for the answers

Complete the Capital Budgeting Schedule

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Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $229,500. Project 2 requires an initial investment of $156,000.  Annual Amounts Project 1 Project 2 Sales of new product $ 148,000 $ 128,000 Expenses     Materials, labor, and overhead (except depreciation) 77,000 44,000 Depreciation—Machinery 32,000 30,000 Selling, general, and administrative expenses 20,000 32,000 Income $ 19,000 $ 22,000 (a) Compute each project’s annual net cash flow.(b) Compute payback period for each investment.

A medium size manufacturing company has a budget of $200,000 to invest on five different capital projects. Each has a six year life. Additional financial data for the five project opportunities are given below. Initial Cost $50K EUAB OD.A. E OCAB A OC. B. D OA.C.E 12,160 Determine which projects should be funded. B $80K 18,368 C $30K 7,932 D $40K 8,652 E $60K 13,374

Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $268,000. Project 2 requires an initial investment of $170,000. Annual Amounts Sales of new product Expenses Project 1 Project 2 $ 180,000 $160,000 Materials, labor, and overhead (except depreciation) 85,000 52,000 Depreciation-Machinery 40,000 38,000 Selling, general, and administrative expenses 28,000 40,000 Income $27,000 $ 30,000 (a) Compute each project's annual net cash flow. (b) Compute payback period for each investment. Annual Amounts Income Sales of new product Project 1 Project 2 Cash Flow Income Cash Flow $180,000 $160,000 Expenses Materials, labor, and overhead (except depreciation) 85,000 52,000 Depreciation-Machinery 40,000 38,000 Selling, general, and administrative expenses 28,000 40,000 Income $27,000 $30,000 Net cash flow $0 Payback Period Numerator: / Denominator: Project 1 Project 2 = Payback period = 0 = 0

The Dammon Corp. has the following investment opportunities:   Machine A Machine B Machine C ($10,000 cost) ($22,500 cost) ($35,500 cost) Inflows Inflows Inflows year 1 $ 6,000   year 1 $ 12,000   year 1 $ -0-   year 2   3,000   year 2   7,500   year 2   30,000   year 3   3,000   year 3   1,500   year 3   5,000   year 4   -0-   year 4   1,500   year 4   20,000       Under the payback method and assuming these machines are mutually exclusive, which machine(s) would Dammon Corp. choose?

The following information is for a proposed project that will provide the capability to produce a specialized product estimated to have a short market life. Capital investment is $1,000,000 Cost of depreciable property which is part of $1,000,000 total estimated project cost is $650,000 Depreciable property is categorized in CCA 30% class with 50% rule applicable. Project analysis period is 3 years Annual operating and maintenance expenses are $636,000 in first year and increase at 5% rate per year Company expects to make $1,250,000 of revenue from sales of new product Salvage value of depreciable property at end of 3 years is $280,000 Corporate taxes are 40% MARR is 15% per year Calculate a 3-year cash flow statement then calculate using excel, Net Present Value of the project IRR

A county in Tennessee is considering the following public interest project. Initial Cost $22.5M Annual Maintenance Cost $525K EUAB $3.3M Given a useful life of 12 years and an interest rate of 4%, the benefit /cost ratio is........... A. 1.01 B. 1.67 C. 1.48 D. 1.51.

The Dammon Corp. has the following investment opportunities: Machine A Machine B Machine C ($10,000 cost) ($22,500 cost) ($35,500 cost) Inflows Inflows Inflows year 1 $6,000 year 1 $12,000 year 1 $-0- year 2 year 3 3,000 year 3 3,000 year 2 7,500 1,500 year 3 1,500 year 4 20,000 year 2 30, 000 5,000 year 4 -0- year 4 Under the payback method and assuming these machines are mutually exclusive, which machine(s) would Dammon Corp. choose? Multiple Choice Machine C Machine B Machine A

Air Scrubbers Furnace Fuel Change: Initial Investment $ 1.350,000 $ 385.000 Annual Net Cash Flows $ 225.000 315.000 Annual Net Income Project Life Average Book Value Cost of Capital $ 135,000 S 150,000 15 years 15 years $ 675,000 692.500 6% 8%

Required information A project has a first cost of $670,000, a salvage value of 27% of the first cost after 3 years, and annual (GI-OE) of $275,000. Assume the company has a Te of 37%. Determine the approximate after-tax rate of return (ROR). The after-tax rate of return (ROR) is determined to be

Calculate the NPV of Project A using the below information: Project period: 5 Years Amount paid for research: $10,500 Cost of equipment: $150,000 (Depreciation method: Straight line for 5 years) Annual savings from this project A: $55,500 Cost of Capital: 12% Tax rate: 38% a. $4,634.80 b. -$25,959.65 C. $15,134.80 d. -$36,459.65 U: 0.0 kB/s D: 0.3kBls rch DELL

n Taraz Company has assembled the following dato with respect to eight projects. Project 1: Initial cost $100,000, NPV- $5.000 Project 2: intial cost $104000, NPv 55,150 Pject innal cost $tOR.000 NPV1530 Project 4: Initial cost $110,000; NPV = $5,450 Project 5: Initial cost $98,000, NPV $4950 Project 6 Ininial cost 596.000, NPV S4,900 Project 7. nitial coot S4000, NPVSAASO Paject ntia con po0 MPY $4,700 Taraz Company can only do one of the projects. Which ONE is the BEST? Note: Your calculator needs to display at least 4 digits after the decimal in order to anewer tha question comecty O Project 1 Project 2 Project 3 Project 4 O Project 5 Project 6 Project 7 Project 8 SUMIT ALL ANEWERS

General accounting

Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts:   (a) Invest in A (b) Invest in C (c) Invest in C and B (d) Invest in B

Average rate of return The following data are accumulated by Patterson Inc. in evaluating two competing capital investment proposals: Line Item Description Project C Project T Amount of investment $125,000 $140,000 Useful life 10 years 12 years Estimated residual value $5,000 $10,000 Estimated total income over the useful life $65,000 $108,000 Determine the expected average rate of return for each project.