Majestic Aircraft Corporation is considering purchasing composite wing fixturesfor the assembly of its signature aircraft. The cost of the assembly system is $3million with life expectancy of 10 years, annual operating cost of $200.000 withzero salvage value. MAC anticipates a stream of $1,000,000 in revenue per yearfor 10 years from this project. Using annual worth analysis and assuming MACuses a MARR (interest rate) of 10 percent, is this investment economicallyjustified? What is the Net Annual Cash Flow? *$900,000$855,000$800,000$750,000Assume there is no annual operating cost, but there are rebuild costs of$800,000 in year 3 and $1,200,000 in year 7. Assume everything else remainsthe same; re-calculate the AW of the project. What is the present worth of allcosts? *$4,216,880$4,545,222$4,424,658$4,765,213

Present worth states the concept that the amount which is present today is more valuable than the…

Answered: O $800,000

Business

Finance

O $800,000

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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7:38 Murdoch Pty Ltd is considering thre... Q&A Cash Flows 1. Murdoch Pty Ltd is considering three mutually exclusive projects. The initial cash outflow and after-tax cash inflows associated with each project are show in the following table: Initial Cash Outflow Cash Inflows Years 1-5 Related Questions Textbook Solutio Ask Project X ($) Q Search Project Y ($) 50,000 100,000 115,000 Project Z ($) 27,000 41,000 43,000 A) Calculate the payback period for each period B) Calculate the NPV of each project assuming, that the company has a cost of capital equal to 13% C) Calculate IRR for each project. D) Summarise the preferences dictated by each measure, and indicate which project you would recommend. Explain why. 0 ... My Library Notifications More
Consider a project with the following cash flows: C0 C1 C2 C3 C4 -20,000 9,000 9,000 9,000 9,000 If the appropriate discount rate for this project is 15%, then the NPV is closest to: Select one: a. -$1,872 b. -$5,700 c. $1,872 d. $5,700
! Required information [The following information applies to the questions displayed below.] On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows: Park Strand $ 31,300 $ 116,000 107,500 Current assets Noncurrent assets 49,200 Total assets $ 223,500 $ 80,500 $ 52,500 66,000 105,000 Current liabilities $ 30,500 Long-term debt Stockholders' equity 50,000 $ 80,500 Total liabilities and equities $ 223,500 On January 2, Park borrowed $70,400 and used the proceeds to obtain 80 percent of the outstanding common shares of Strand. The acquisition price was considered proportionate to Strand's total fair value. The $70,400 debt is payable in 10 equal annual principal payments, plus interest, beginning December 31. The excess fair value of the investment over the underlying book value of the acquired net assets is allocated to inventory (60 percent) and to goodwill (40 percent). On a consolidated balance sheet as of January 2, what should be the amount for…
The Lost in Space corporation is trying to finally build a space ship that won't end up stranding everyone on it in some random part of the galaxy. To do so they are considering a new three-year project that will require an initial investment of $400 million. These initial assets will be depreciated straight-line to zero over their three-year tax life. The firm will be able to sell these assets at the end of the project for $45,250,000. The project is estimated to generate the following revenues during it's three year life: $315,485,369 in year one, $325,690,023 in year two, and $344,555,000 in year three. The firm expects that their costs will be equal to 47.75% of the projects same year revenues. They expect that project net working capital (in the form of inventory required) will be equal to 10.25% of the next year's revenue. The firms tax-rate is 21%. What are the project's cash flows from assets for years 0-3? What is the IRR on this project? Use available Excel template and…
9. Consider the following two mutually exclusive projects: Project A Project B -$15,000 -$25,000 $5,000 $12,000 $8,000 n 10 $0 $X $X 3 PW (15%) ? $9,600 The firm's MARR is known to be 15%. Compute the PW (15%) for Project A. 10. In question 9, compute the unknown cash flow X in years 2 and 3 for Project B. 11. In question 9, which project would you select?
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Information for Hobson Corporation for the current year ($ in millions): Income from continuing operations before tax Loss on discontinued operation (pretax) Temporary differences (all related to operating income): Accrued warranty expense in excess of expense included in operating income Depreciation deducted on tax return in excess of depreciation expense Permanent differences (all related to operating income): Nondeductible portion of entertainment expense The applicable enacted tax rate for all periods is 25%. How much tax expense on income from continuing operations would be reported in Hobson's income statement? Note: Round the final answer to 2 decimal places. $ 230 10 85 175 20
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oks Login Module 5-Chap 1 8 H Office templates & t.. Saved EChapter 4 Help Save & Exit On November 1, 2021, Jamison Inc. adopted a plan to discontinue its barge division, which qualifies as a separate component of the business according to GAAP regarding discontinued operations. The disposal of the division was expected to be concluded by Aprit 30, 2022. On: December 31, 2021, the company's year-end, the following information relative to the discontinued division was accumulated: Operating loss Jan. 1-Dec. 31, 2021 Estimated operating losses, Jan. 1 to April 30, 2022 Excess of fair value, less costs to sell, over book value at Dec. 31, 2021 $69 million 98 million 15 million In its income statement for the year ended December 31, 2021, Jamison would report a before-tax loss on discontinued operations of Multiple Choice $152 million.
which has a better IRR Project 1 Year Cashflows Discount Rate 10% 0 $ (750,000.00) 1 $ 250,000.00 2 $ 300,000.00 3 $ 350,000.00 4 $ 200,000.00 5 $ 100,000.00 Project 2 Year Cashflows Discount Rate 10% 0 $ (1,000,000.00) 1 $ 200,000.00 2 $ 300,000.00 3 $ 400,000.00 4 $ 500,000.00 5 $ 700,000.00
Five mutually exclusive projects had the following data: V W X Y Z NPV $(3,000) $56,000 $23,000 $14,000 $28,000 IRR 7% 10% 15% 13% 6% Which project is preferred?
pts) Lloyd Enterprises Year 0 1 2 WN 3 45 5 has a project which has the following cash flows: Cash Flows ($) -158,000 27,000 66,000 103,000 130,000 29,000 The cost of capital is 10 percent. The project's discounted payback period is ..years.

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