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All of the following are capital investment decisions except:
A. paying $600,000 to renovate a restaurant.
B. acquiring $100,000 of common stock.
C. purchasing equipment for $80,000.
D. buying a $5,000,000 manufacturing plant.
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- Sa. A large profitable corporation is considering a capital investment of $50,000. The equipment has a projected salvage value of $0 at the end of the two-year project period. The annual gross income each of the next two years is projected to be $44,000 and expenses are projected to be $14,000 annually. The depreciation amount will be $25,000 annually. This profitable corporation has an incremental income tax rate of 25% and the MARR is 10%. Determine the before-tax CF for Year 2 (only – not a total).Cains, Inc., a resort management company, is refurbishing one of its hotels at a cost of $8,498,918. Management expects that this will lead to additional cash flows of $1,960,000 for the next six years. What is the IRR of this project? If the appropriate cost of capital is 12 percent, should Cains go ahead with this project? (Round answer to 2 decimal places, e.g. 5.25%.) The IRR of this project is ________ % The firm should (reject or accept) the projectYou are considering adding a microbrewery onton one of your firm's exisiting restaurants. this will entail an increase inventory of $8700, an increase in accounts payables of $23.00, and an increase in property, plant, and equipment of $48,000. All other accounts will remain unchanged. The change in net working capital results from the addtion of the microbewery is?
- As the new engineer in the company, you are tasked to send out a proposal for an expansion of the current manufacturing plant. As per research, you came up with a summary of the capital needed and it is amounting to Php 18,500,000.00. Annual depreciation is noted as well as 10% of your capital invested. You are asked to determine the rate of return if your projected annual revenue is at Php 5.500,000.00. Express the answer in percentage, up to two decimal places/digits. Answer Blank 1%As the new engineer in the company, you are tasked to send out a proposal for an expansion of the current manufacturing plant. As per research, you came up with a summary of the capital needed and it is amounting to Php 18,500,000.00. Annual depreciation is noted as well as 10% of your capital invested. You are asked to determine the rate of return if your projected annual profit is at Php 5,500,000.00. Express the answer in percentage, up to two decimal places/digits.You need to solve this exercise using Excel functions. (Please show work on excel) ABC Inc. plans to invest in new equipment. It will purchase the new equipment for $130,000 and sell its old version, which is fully depreciated, for $25,000. The new equipment has a 10-year useful life and will save $45,000 a year in expenses before tax. The opportunity cost of capital is 11%, and the firm’s tax rate is 21%. What is the NPV of this investment if ABC can benefit from bonus depreciation?
- Blossom, Inc., a resort management company, is refurbishing one of its hotels at a cost of $5,530,684. Management expects that this will lead to additional cash flows of $1,250,000 for each of the next six years. What is the IRR of this project? If the appropriate cost of capital is 12 percent, should Blossom go ahead with this project? (Round answer to 4 decimal places, e.g. 5.2516%.) The IRR of this project is The firm should reject ✓the project. 9.5 se %Northern Manufacturing Ltd. is considering the investment of $85,000 in a new machine. The machine will generate cash flow of $12,000 per year for each year of its eleven-year life and will have a salvage value of $7,000 at the end of its life. The company's cost of capital is 8%. Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.)Required: Calculate the net present value of the proposed investment. (Ignore income taxes.)Example: A corporation is contemplating the purchase of some specialized machinery. The machinery will cost $250,000 and will be depreciated over its five year life by using the straight line method. Annual inflows of $300,000 and cash operating expenses of $220,000 are anticipated as a result of this new machinery. The corporation is subject to a 40 percent income tax rate. The payback period on this investment (rounded to the nearest tenth) is:
- Winner’s Casino Corporation is considering an expansion of their busiest casino. Winner’s Casino has already conducted and paid $50,000 for a marketing survey. The expansion will cost $2.5 million for the assets including delivery costs and all construction costs. In addition, $500,000 in net working capital will be needed immediately. Compute the net investment of this expansion project. Remember to use a $, commas where appropriate, and carry your answer to 2 decimal places.The value of your investment is divided into $30,000 for the land and $120,000 for the office space. Assume the salvage value of your investment is $40,000 at the end of seventh year. Using CCA=1%, compute the undepreciated capital cost of the office space for year four. a) Between $114,000 and $117,000 b) Between $120,000 and $123,000 c) Between $95,000 and $98,000 O d) Between $110,000 and $113,000 e) None of the answers are correct f) Between $92,000 and $95,000Colorado Springs painter and graphic designer Steve Weed is investing $66,000 in assets to expand his fine art business. These assets cannot be salvaged at the end of the project. Weed expects operating cash flows of $27,900 per year for 4 years as a result of the expansion. If $4,200 of net working capital are needed throughout the life of the project, what is the NPV of the expansion? Note: Steve Weed faces a 10% cost of capital. a. $22,439 b. $26,046 c. $21,108 d. $27,493 e. $24,309
