Dilute hydrogen peroxide (H,0,) is produced in the facility where you work as an engineer. The company aims to invest in an additional concentration unit for the production of concentrated hydrogen peroxide (H,0,) in line with customer demands. For the establishment of the required unit, the finance company recommends the following financing model for 3 years: 100,000 TL will be paid every month in the first year, 150,000 TL will be paid every month in the second year and 175,000 TL will be paid every month in the third year. In addition, an additional balloon payment of 700.000 TL will be made in the 36th month. The monthly interest rate is 2.5%. a) If this proposed financing model was not chosen and all installments were paid equally, what would be the monthly equal installment amount? b) What would be the amount to be paid if no payment was made for this additional concentration facility for 3 years and it was made at the end of the 3rd year? payment Find what is required by drawing cash flow charts

Dilute hydrogen peroxide (H,0,) is produced in the facility where you work as an engineer. The company aims to invest in an additional concentration unit for the production of concentrated hydrogen peroxide (H,0,) in line with customer demands. For the establishment of the required unit, the finance company recommends the following financing model for 3 years: 100,000 TL will be paid every month in the first year, 150,000 TL will be paid every month in the second year and 175,000 TL will be paid every month in the third year. In addition, an additional balloon payment of 700.000 TL will be made in the 36th month. The monthly interest rate is 2.5%. a) If this proposed financing model was not chosen and all installments were paid equally, what would be the monthly equal installment amount? b) What would be the amount to be paid if no payment was made for this additional concentration facility for 3 years and it was made at the end of the 3rd year? payment Find what is required by drawing cash flow charts

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

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Aria Acoustics, Incorporated (AAI), projects unit sales for a new 7-octave voice emulation implant as follows: Year Unit Sales 1 2 74,700 80,100 2345 5 85,800 83,000 69,900 Production of the implants will require $1,490,000 in net working capital to start and additional net working capital investments each year equal to 20 percent of the projected sales increase for the following year. Total fixed costs are $3,850,000 per year, variable production costs are $144 per unit, and the units are priced at $326 each. The equipment needed to begin production has an installed cost of $18,600,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as 7-year MACRS property. In five years, this equipment can be sold for about 25 percent of its acquisition cost. The tax rate is 24 percent and the required return is 18 percent. (MACRS schedule) a. What is the NPV of the project? (Do not round intermediate calculations and…
Aria Acoustics, Incorporated (AAI), projects unit sales for a new 7-octave voice emulation implant as follows: Year Unit Sales 1 2345 2 3 5 72,300 77,700 82,600 80,600 66,700 Production of the implants will require $1,410,000 in net working capital to start and additional net working capital investments each year equal to 10 percent of the projected sales increase for the following year. Total fixed costs are $3,450,000 per year, variable production costs are $136 per unit, and the units are priced at $318 each. The equipment needed to begin production has an installed cost of $17,800,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as 7-year MACRS property. In five years, this equipment can be sold for about 15 percent of its acquisition cost. The tax rate is 21 percent and the required return is 15 percent. (MACRS schedule) a. What is the NPV of the project? (Do not round intermediate calculations…
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JD Sdn Bhd has developed a new industrial detergent that can be used in motor vehicle garages. It would cost RM1 million to buy the equipment necessary to manufacture the blenders, and initially, it would require net operating working capital equal to 15% of the 1st year sales amount. Net operating working capital will remain at the same rate. The project would have a life of 5 years. If the project is undertaken, it must be continued for the entire 5 years. The firm believes it could sell 100,000 units per year. The detergents would sell for RM12 per unit. After the first year, JD intends to increase the sales price by 3% annually. The variable cost is RM5 per unit and will increase at an inflation rate of 3%. The company's fixed costs would be RM420,000 at Year 1 and would also increase at a rate of 3% annually. The equipment would be depreciated over a 5-year period, using the straight - line method. The annual depreciation will be calculated based on a salvage value of the…
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A project requires an initial investment in equipment of $96,600 and then requires an initial investment in working capital of $14,400 (at t= 0). You expect the project to produce sales revenue of $131,000 per year for three years. You estimate manufacturing costs at 60 percent of revenues. (Assume all revenues and costs occur at year-end [i.e., t= 1, t= 2, and t=3]). The equipment depreciates using straight-line depreciation over three years. At the end of the project, the firm can sell the equipment for $12,420 and recover the investment in net working capital. The corporate tax rate is 21 percent and the cost of capital is 15 percent. Calculate the NPV of the project. Multiple Choice O O O $4,679 -$3,574 $13,573
A company is planning to install a new automated plastic-molding press. Four different presses are available. The initial capital investments and annual expenses for these four mutually exclusive alternatives are as shown: Assume that each press has the same output capacity (120,000 units per year) and has no market value at the end of its useful life; the selected analysis period is five years; and any additional capital invested is expected to earn at least 10% per year. Which press should be chosen if 120,000 nondefective units per year are produced by each press and all units can be sold? The selling price is $0.375 per unit. Solve by hand and by spreadsheet.
Aria Acoustics, Incorporated (AAI), projects unit sales for a new 7-octave voice emulation implant as follows: Year Unit Sales 1 74,400 2345 79,800 85,400 82,700 69,500 Production of the implants will require $1,480,000 in net working capital to start and additional net working capital investments each year equal to 15 percent of the projected sales increase for the following year. Total fixed costs are $3,800,000 per year, variable production costs are $143 per unit, and the units are priced at $325 each. The equipment needed to begin production has an installed cost of $18,500,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as 7-year MACRS property. In five years, this equipment can be sold for about 20 percent of its acquisition cost. The tax rate is 23 percent and the required return is 17 percent. (MACRS schedule) a. What is the NPV of the project? (Do not round intermediate calculations and…
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