not use ai please 9Guardian Incorporated is trying to develop an asset-financing plan. The firm has $370,000 in temporary current assets and $270,000in permanent current assets. Guardian also has $470,000 in fixed assets. Assume a tax rate of 30 percentCheck my wa. Construct two alternative financing plans for Guardian. One of the plans should be conservative, with 70 percent of assets financedby long-term sources, and the other should be aggressive, with only 56.25 percent of assets financed by long-term sources. Thecurrent interest rate is 12 percent on long-term funds and 8 percent on short-term financing. Compute the annual interest paymentsunder each plan.-BookAnnual InterestHintPrintConservativeAggressive$$97,44083,363erencesb. Given that Guardian's earnings before interest and taxes are $250,000, calculate earnings after taxes for each of your alternatives.ConservativeEarning AfterTaxesAnnressivePrev9 of 14

Answered: 9 Guardian Incorporated is trying to…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 25P

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14. Collins Systems, Inc., is trying to develop an asset-financing plan. The firm has $300,000 in temporary current assets and $200,000 in permanent current assets. Collins also has $400,000 in fixed assets. a) Construct two alternative financing plans for the firm. One of the plans should be conservative, with 80 percent of assets financed by long-term sources and the rest financed by short-term sources. The other plan should be aggressive, with only 30 percent of assets financed by long- term sources and the remaining assets financed by short-term sources. The current interest rate is 15 percent on long-term funds and 10 percent on short-term financing. Compute the annual interest payments under each plan. b. Given that Collins's earnings before interest and taxes are $180,000, calcu- late earnings after taxes for each of your alternatives. Assume a tax rate of 40 percent.
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please do it an most easy way. Do step by step. Don't just give me answers cause that wouldn't be fair. Thanks. Subject: Corporate Finance
Your division is considering two investment projects, each of which requires an up-front expenditure of 25 million. You estimate that the cost of capital is 10% and that the investments will produce the following after-tax cash flows (in millions of dollars): a. What is the regular payback period for each of the projects? b. What is the discounted payback period for each of the projects? c. If the two projects are independent and the cost of capital is 10%, which project or projects should the firm undertake? d. If the two projects are mutually exclusive and the cost of capital is 5%, which project should the firm undertake? e. If the two projects are mutually exclusive and the cost of capital is 15%, which project should the firm undertake? f. What is the crossover rate? g. If the cost of capital is 10%, what is the modified IRR (MIRR) of each project?
Mustafa Inc. has three potential investment projects but can choose only one to invest in. Below is financial information on these projects: Project Investment Net Present Value 1 $300,000 $61,500 2 $325,000 $77,000 3 $215,000 $62,000 Use the profitability index, which project should the company choose?
Shaylee Corporation has $2.00 million to invest in new projects. The company's managers have presented a number of possible options that the board must prioritize. Information about the projects follows: Initial investment Present value of future cash flows Required: 1. Is Shaylee able to invest in all of these projects simultaneously? 2-a. Calculate the profitability index for each project. 2-b. What is Shaylee's order of preference based on the profitability index? Complete this question by entering your answers in the tabs below. Req 1 Project A $ 435,000 785,000 Req 2A and 2B Is Shaylee able to invest in all of these projects simultaneously? Is Shaylee able to invest in all of these projects simultaneously? Project C $ 740,000 1,220,000 Project D $ 965,000 1,580,000
Turner Video will invest $64,500 in a project. The firm's cost of capital is 6 percent. The investment will provide the following inflows. Use Appendix A for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year 1 2 3 4 5 Inflow $ 18,000 20,000 24,000 28,000 32,000 The internal rate of return is 10 percent. a. If the reinvestment assumption of the net present value method is used, what will be the total value of the inflows after five years? (Assume the inflows come at the end of each year.) Note: Do not round intermediate calculations and round your answer to 2 decimal places. Total value of inflows b. If the reinvestment assumption of the internal rate of return method is used, what will be the total value of the inflows after five years? Note: Use the given internal rate of return. Do not round intermediate calculations and round your answer to 2 decimal places. Total value of inflows
CIP Co, a telecommunications company, is considering an investment of $150 million into a wind farm. The wind farm is expected to generate after-tax cash flows of $75 million in Year 1, $120 million in Year 2, and $175 million in Year 3. CIP Co’s WACC is 12% but some members of management believe the project should be assessed using a discount rate of 15% (which is what Major Bank Ltd advises is a typical discount rate for a wind farm project). The company has spent $15 million up to today researching this opportunity. What is NPV?
ABC Industries is considering a 3-year project that will cost $200 today followed by free cash flows to firm of $100 in year 1, $80 in year 2, and $160 in year 3. ABC has $1000 of assets with a debt ratio of 40.00%. ABC's before-tax cost of debt is 7.00% and its cost of equity is 12.00%. Suppose ABC pays a fee of$6 to the investment bankers who help them to raise the $120 Debt capital. Assuming the tax rate is 35.00% and that the flotation cost can be amortized (i.e. deducted) for tax purposes over the 3 year life of the project. The NPV of the project using the APV method, taking into account the flotation costs, is closest to: $8.40 $11.34 $10.66 $7.72
Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $400,000 and has a present value of cash flows of $1,100,000. Project 2 requires an initial investment of $4,000,000 and has a present value of cash flows of $6,000,000. 1. Compute the profitability index for each project. 2. Based on the profitability index, which project should the company prefer? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. Project 1 Project 2 Choose Numerator: Profitability Index T 7 Choose Denominator: 4 of 5 180 # Next > G O
The management of Winstead Corporation is considering the following three investment projects (Ignore income taxes.): Project Q Project R Project S Investment required $ 57,200 $ 97,200 $ 176,000 Present value of cash inflows $ 62,092 $ 111,792 $ 193,320 The only cash outflows are the initial investments in the projects. Required: Rank the investment projects using the project profitability index.
E Over-the-Top Canopies (OTC) is evaluating two independent investments. Project S costs $170,000 and has an IRR equal to 9 percent, and Project L costs $160,000 and has an IRR equal to 7 percent. OTC's capital structure consists of 20 percent debt and 80 percent common equity, and its component costs of capital are rat = 4%, rs = 11%, and re = 14.5%. If OTC expects to generate $260,000 in retained earnings this year, which project(s) should be purchased? Round your answers to one decimal place. Project S L eBook Thus, -Select- WACC % % Acceptable? -Select- ✓ -Select- should be purchased. Grade it Now Save & Continue Continue without saving

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