Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.85 million and create incremental cash flows of $562,376.00 each year for the next five years. The cost of capital is 10.66%. What is the net present value of the J-Mix 2000? Submit Answer format: Currency: Round to: 2 decimal places.

Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.85 million and create incremental cash flows of $562,376.00 each year for the next five years. The cost of capital is 10.66%. What is the net present value of the J-Mix 2000? Submit Answer format: Currency: Round to: 2 decimal places.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Calculate the equivalent future amount in year 4 that a company is paying for the dozer at 4% per year if the price of the price of the bulldozer now $100,000 (Draw the cash flow diagram) e
Murray’s Coffee House is trying to choose between two new coffee bean roasters. The required rate of return for either machine is 10%. (Assuming the Project’s cash flows can be repeated) Shown below are the after-tax cash flows associated with each machine: year CFX CFY 0 (50,000) (30,000) 1 20,000 20,000 2 20,000 20,000 3 20,000 4 20,000 i. Calculate the replacement chain NPV for each project. ii. Calculate the equivalent annual annuity for each project.
Ross enterprises is considering a 3 year project with the following cash flows: Time 0: spend $4800 Time 1: collect $2200Time 2: collect $3600 Time 3: collect $1400 Ross's discount rate is 7.0%. What is the NPV of the project? (Do not roundintermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.).
Salalah Wind Energy has taken up a new project with an initial investment of 50000 OMR.The expected future cashflow from the project over the next three years will be 22500 OMR, 23500 OMR and 24500 OMR.What is the profitability index if the discount rate is 7 percent? اخترأحد الخيارات a. 1.63 b. 1.48 c. 1.44 d. 1.23 e. None of these
For each of the following problems, (a) draw the cash flow diagram; (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box. An asset costs $20,000 today. If inflation is 6% per year and interest is 10% per year, what will be the appropriate future value of the machine adjusted for inflation in 5 years?
Dhofar water is installing new equipment at a cost of 140000 OMR. Expected cash flows from this project over the next three years will be 95000 OMR , 80000 OMR and 65000 OMR. The company's discount rate for such projects is 10 percent. What is the project's discounted payback period? Select one: О а. 1.63 years ОБ. 1.81 уеars О с. 2.82 years O d. None of these О е. 1.44 years
The US based company is investing in a 2-year project in Europe. The initial investment is €10,000. The expected cash inflow in the year one is €6,000 and in the year two is €8,000. The risk-free rate in US is 3% and Europe 2%. If the spot rate is $1.25/€ and the required rate of return of the project is 14%, calculate the NPV of the project in dollars. (A) The NPV of the project in dollars is $1,773.62. (B) The NPV of the project in dollars is $1,704.32. (C) The NPV of the project in dollars is $1,418.90. (D) The NPV of the project in dollars is $1,989.74.
You are operating an old machine that is expected to produce a cash inflow of $5,600 in each of the next 3 years before it fails. You can replace it now with a new machine that costs $20,600 but is much more efficient and will provide a cash flow of $10,900 a year for 4 years. Calculate the equivalent annual cost of the new machine if the discount rate is 15%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Equivalent annual cost of the purchase price $ 791.60 x
A new computer system will require an initial outlay of $19,000, but it will increase the firm’s cash flows by $3,800 a year for each of the next 8 years. How high can the discount rate be before you would reject the project? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places
Peaceful Cruises wants to build a new cruise ship that has an initial investment of $200 million. It is estimated to provide an annual cash flow over the next 15 years of $24 million per year. The discount rate is 7%. What is the discounted payback period? Enter your answer rounded to two decimal places
Assume everything is given in n=0, CONSTANT dollars unless otherwise stated: MTA Textile INC. is considering to invest on a computer-controlled fabric cutting machine. The machine’s purchasing price is $150,000. The part of the initial cost of this investment will be paid using a $50,000 loan. The loan will be repaid in yearly installment for four years at 12%. This project requires a working capital investment of $15,000 at year 0. This investment on working capital will be fully recovered after the project is terminated. The salvage value of this investment at the end of fourth years is expected to be $40,000. This machine will generate annual revenues of $55,000, but have annual operating costs of $3,000. The equipment has a 45% declining balance rate for CCA calculations. The marginal income tax rate for the firm is given as 35%. A general inflation rate is expected to be 5%. However, the firm also expects 8% annual increase in revenue and working capital and a 4% annual increase…
Company Xyz will buy a turning machine. The cost of the lathe machine is 25 000 TL and the scrap value is 5 000 TL. Below are the annual cash inflows for two different turning machines. Which turning machine would you recommend to the company? Years Machine K Machine L 1 9000 13500 2 14000 12000 3 11000 11000 4 7750 8600 5 9500 15000 If the cost of capital is 25%, which alternative would you choose? Give the answer using the annual equivalent net product (YENH) method?

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS