MAKE OR BUY DECISIONS. Your boss tells you to build a certain number of cars, and your job is to find the most cost-effective way to do it using NPV. Use a calculator to do the math after writing out the proper formula. Round to the nearest penny ($0.01). you build cars using an existing U.S. plant, you expect cash flows at times 0, 1, 2, and 3 of 200, 200, 200, and 200, and the discount rate is 10%. Find the NPV. b. If you build a new plant in Mexico, your expected cash flows will be –1000, +400, +500, and +600, but it's a little riskier, so r=12%. Find the NPV. а. If c. If you acquire an existing plant in Mexico, cash flows should be -500, +300, +400, +500. Find NPV if this project has moderate risk and a discount rate of r=11%.

MAKE OR BUY DECISIONS. Your boss tells you to build a certain number of cars, and your job is to find the most cost-effective way to do it using NPV. Use a calculator to do the math after writing out the proper formula. Round to the nearest penny ($0.01). you build cars using an existing U.S. plant, you expect cash flows at times 0, 1, 2, and 3 of 200, 200, 200, and 200, and the discount rate is 10%. Find the NPV. b. If you build a new plant in Mexico, your expected cash flows will be –1000, +400, +500, and +600, but it's a little riskier, so r=12%. Find the NPV. а. If c. If you acquire an existing plant in Mexico, cash flows should be -500, +300, +400, +500. Find NPV if this project has moderate risk and a discount rate of r=11%.

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

!
(Additional Questions Next Page) 5. You are considering buying a food truck and other equipment to make a little money in the fall and spring. You are projecting that you can generate the following net cash flows after paying operating expenses: $3800 next month and $2800 the following month. Then you will take the winter off and start back up again next spring, when you hope to earn $2500 6 months from now, $3700 7 months from now, and $4500 8 months from now, $3500 9 months from now, and $4500 12 months from now. (Discount the first $3800 1 month, the $2800 2 months, etc.) Use a discount rate of 6% per year. Show all work below. What is the present value of this cash flow for the first year of operation? (do the problem algebraically by hand, then confirm using one of the Excel methods). What is the value of the cash flow (from the food truck problem) if you do not discount the numbers? 7. Could you use a PMT formula to solve this problem? Why, or why not? 6.
The table below lists all of the investment opportunities available for the businesses of a small island country. Instructions: In part a, round your answers to 1 decimal place. In part b, enter your answer as a whole number. a. Calculate the expected rate of return for each project. Fill in the values in the table. Project LA A B C D E F Project Cost, Millions million $15 9 27 44 7 16 Expected Net Revenue, Millions $16 10 28 47 7.5 17 b. If the nominal interest rate for investment borrowing is 12 percent and the expected inflation rate is 5 percent, what will be this country's level of investment? Rate of Return, Percent
You wrote a piece of software that does a better job of allowing computers to network than any other program designed for this purpose. A large networking company wants to incorporate your software into its systems and is offering to pay you $549,000 today, plus $549,000 at the end of each of the following six years, for permission to do this. If the appropriate interest rate is 6 percent, what is the present value of the cash flow stream that the company is offering you? (Round factor values to 4 decimal places, e.g. 1.5215 and final answer to 2 decimal places, e.g. 15.25.) Present value $
Pls help with below homework. You graduate and decide you will start a consulting business out of your home. To perform the basic analysis needed for your field, you need to purchase testing equipment. The seller has 2 prices, one for incorporated businesses ($25,000) and one for individuals ($20,000). The salvage value of this equipment after 4 years is predicted to be $10, 000 in both cases. You and your partner are debating whether it is better to pay the higher purchase price and be able to depreciate the asset at a CCA rate of 30%, with the corporate tax rate of 40% OR to just keep them as a personal asset, with a sales tax rate of 10% at the time of sale. If we ignore the big picture arguments to be made here, what are the tax implications involved with each purchase/ sale option?
Please no handwriting solution and no plagiarism please
ENGINEERING ECONOMY UPVOTE WILL BE GIVEN. PLEASE WRITE THE COMPLETE SOLUTIONS LEGIBLE. FOLLOW THE INSTRUCTIONS CAREFULLY. Draw CASH FLOW DIAGRAMS for the GIVEN AND REQUIRED/FIND. Begins the solutions by writing the equations/formulas. Use 2 decimal places and Box the final answer. The father of a Junior High School Student wants to make sure that his son will be able to enroll and finish an engineering course after high school. To secure the future of his son, he plans to make deposits of P50,000 in a bank account every quarter for 5 years. The deposits will be made at the start of the periods. How much money can his son withdraw by the end of the 6th year if the money earns an interest of 10% compounded semi-annually?
You are thinking of starting a food delivery service. If you decide to go ahead, you would need to purchase a vehicle for $20,000 and establish a cash balance of $100 to use to make change for customers. The CCA rate for vehicles is 30%. The estimated annual pre-tax net operating cash flow is expected to be $8,000. The small business tax rate of 18.62% would apply. An appropriate discount rate for this type of business is 12%. a) What is the NPV of starting the business, operating it for 2 years and keeping the vehicle (but not the cash balance) after that? b) What is the NPV of starting the business, operating it for 2 years and then winding up all aspects of the business, including selling the vehicle for $10,000? The business has no other automotive assets. c) Should you go ahead with the business? Why or why not? (A one sentence answer is fine, but it should refer to the impact on you, not just the numbers).
You wrote a piece of software that does a better job of allowing computers to network than any other program designed for this purpose. A large networking company wants to incorporate your software into its systems and is offering to pay you $450,000 today, plus $450,000 at the end of each of the following six years, for permission to do this. If the appropriate interest rate is 6 percent, what is the present value of the cash flow stream that the company is offering you? (Round factor values to 4 decimal places, e.g. 1.5215 and final answer to 2 decimal places, e.g. 15.25.) Present value $
(а) Identify each of the following cash items whether it is fixed cost, variable cost, sunk cost, opportunity cost or implicit cost. 1 An appliance company was considering investing in a new line of refrigerators to sell but instead chose to invest the same amount of money into an employee training program (i) The expenses incurred in legal proceedings and regulations formation of the company. You created a music streaming service and spent RM 5,000 on marketing and advertising to help spread the word about it to consumers. As a result, the marketing and advertising campaigns prove ineffective. (ii) (iii) Cost of shipping finished goods to customers. (iv) An attorney who currently works for a corporate law firm is considering opening their own legal practice.
Use the TVM Solver to answer the following questions. Write each known variable's value as it appears in the calculator and use a question mark for the missing variable. Then, in the space provided write the missing variable's value, as it appears in the calculator. Finally, write your final answer in context, with units, as a complete sentence. Round to three decimals or by context. 1. Thomas plans to invest $3,400 into a money market account with a 6% annual interest rate compounded weekly. How much will be in the account after 9 years? Variable Value N = 1% = PV = PMT= FV = PY = CY = What is the Missing Variable Unit? Write a Context Sentence:
Draw the cash flow diagram with your solution.In a certain department store, the monthly salary of a saleslady is partly constant and partly varies with her sales for the month. When the value of her sales for the month is P10,000, her salary for the month is P900. When her salary for the month goes up to P12,000, her monthly salary becomes P1,000. What must be the value of her sales for the month so that her salary for the month will be P2,000?

SEE MORE QUESTIONS

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