Brewster’s is considering a project with a 5-year life and an initial cost of $120,000. The discount rate for the project is 12 percent. The firm expects to sell 2,100 units a year at a cash flow per unit of $20. The firm will have the option to abandon this project after three years at which time it could sell the project for $50,000. At what level of sales should the firm be willing to abandon this project at the end of the third year?

Q: You are considering a new product launch. The project will cost $2,050,000, have a four-year life,…

A: Net present value is the difference between the present value of cash inflows and present value of…

Q: Corner Restaurant is considering a project with an initial cost of $211,600. The project will not…

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A: Payback period = Investment cost / Annual cash flows

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A: Net present value is time value based capital budgeting and can be found as the difference between…

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A: cash flow at the end of year 5 will be computed as follows:-Cash flow at the end of year 5 = Net…

Q: XYZ Inc. is deciding whether to buy a new building.  The building will increase cash flows by…

A: The Net Present Value (NPV) of the project, assuming it is started today, is $29,081,382.32. ​​…

Q: Bronco Corp is considering a new investment. The Investment will cost the firm $35,000 now and will…

A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Q: oanette, Incorporated, is considering the purchase of a machine that would cost $460,000 and would…

A: Npv is also known as Net present value.It is a capital budegting technique which helps in decision…

Q: b. ΔΝPVΔΕC c. Cash break-even quantity d-1. Accounting break-even quantity d-2. Degree of operating…

A: PART A  DEPRICATION = 1,675,000/4                          = 418,750 OFCBASE = [SP - VC -…

Q: Mosaic is evaluating a manufacturing plant that has the potential to generate revenue of  $2 million…

A: The value of the firm can be determined on the basis of expected cash flows. The expected cash flows…

Q: Mars Inc. is considering a 5-year project that requires a new machine that costs $62,000, and an…

A: Net Cash Flow is that amount which is received by the investor from the project. It includes the…

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A: NPV (Net Present Value) is a financial metric used to evaluate the profitability of an investment by…

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A: Net present value (NPV) of an alternative refers to the variance between the initial investment or…

Q: Crane Company management is considering a project that will require an initial investment of $54,000…

A: Capital budgeting is the process where the feasibility of long-term asset purchase is assessed using…

Q: Your firm is considering a project with a five-year life and an initial cost of $260,000. The…

A: A capital budgeting project has a real option of abandonment built into it. The NPV of the project…

Q: Purchase a new computer system for $45,000. The system is expected to last 6 years with a salvage…

A: There are 2 options -  1- Purchase a new computer system for $45,000 with salvage $7000 after 6…

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A: It is a case where the internal rate of return is to be calculated. If internal rate of return is…

Q: Brewster's is considering a project with a 5-year life and an initial cost of $120,000. The discount…

A: > We create the cash flow table in Excel writing down the values for each year and cash flows for…

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A: An internal rate of return is employed to assess the profitability of an investment. It is a…

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A: It is a capital budgeting tool to decide whether the capital project should be considered or not. If…

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A:

Q: Should the project be rejected and why?

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A: Net Present Value (NPV) is a financial metric used in capital budgeting and investment analysis to…

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A: Step 1:First find the After-tax salvage value:= 183,000 * ( 1 - 21%)= $144570 Step 2:= -601,000 -…

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A: The question is based on the concept of net present value (NPV), NPV is a technique of the capital…

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A: Net present value refers to the method used by the investors for estimating whether the project is…

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A: Break even point is where there is no loss and no profit and only all costs are covered and profit…

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A: Net present value is determined by deducting the initial investment from the current value of cash…

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A: Summary:-The decision to abandon must be made at time 2 or not at all. If the volatility of returns…

Q: Brewster’s is considering a project with a 5-year life and an initial cost of $120,000. The discount…

A: We create the cash flow table in Excel writing down the values for each year and cash flows for…

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A: An investor or company can forecast the profitability of a project or investment by using the Net…

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A: "Initial cost is The total amount of money required to initiate and implement a specific project".…

Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.