Problem 12-12 Project Cash Flows (LG12-3)Your highly successful software company is considering adding a new software title to your list. If you add the newproduct, it will use capacity on your disk duplicating machines that you had planned on using for your flagshipproduct, "Battlin' Bobby." You had previously planned on using the unused capacity to start selling "BB" on theWest coast in two years. You would eventually have had to purchase additional duplicating machines 10 yearsfrom today, but since your new product will use up the extra capacity, this will require moving this purchase up to2 years from today. If the new machines will cost $101,000 and can be expensed under Section 179, your marginaltax rate is 21 percent, and your cost of capital is 10 percent, what is the opportunity cost associated with using theunused capacity for the new product?Note: The first machine is accounted for in year one, and the one new machine is added in year two. Negativeamount should be indicated by a minus sign. Do not round Intermediate calculations. Round your answer to 2decimal places.Opportunity cost$62,436.36

Determine the original and new timeline for purchasing the machines: Original timeline: Purchase in…

Answered: Problem 12-12 Project Cash Flows…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 18SP

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Problem 10.05 Your answer is partially correct. Try again. Sheridan Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses a 8 percent discount rate for production system projects. Year System 1 System 2 -$14,800 -$46,900 1 14,800 34,900 2 14,800 34,900 14,800 34,900 Calculate NPV. (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round answers to 2 decimal places, e.g. 15.25.) 38082.31 77802.20 NPV of System 1 is $ and NPV of System 2 is $
Cool Math Games... Vanilla Sauce Reci... F. Easiest Bread Pud.... gle Chrome updates, you'll need macOS 10.13 or later. This computer is using OS X 10.11. 5 Homework Year 0 1 2 3 Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 14 percent. Check my work mode: This shows what is correct or incorrect for the work Deepwater Fishing -$ 875,000 330,000 480,000 440,000 Deepwater Fishing Submarine Ride New Submarine Ride -$1,650,000 a-1. Compute the IRR for both projects. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.. 32.16.) Deenwater Fishin 890,000 730,000 590,000 % % Seved a-2. Based on the IRR, which project should you choose? < Prev Creams 10 of 11 MacBook Pro
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Question 13 You have just completed a $24,000 feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for $101,000, and if you sold it today, you would net $111,000 after taxes. Outfitting the space for a coffee shop would require a capital expenditure of $28,000 plus an initial investment of $4,900 in inventory. What is the correct initial cash flow for your analysis of the coffee shop opportunity? Identify the relevant incremental cash flows below: (Select all the choices that apply.) A. Price you paid for the space two years ago. B. Feasibility study for the new coffee shop. C. Initial investment in inventory. D. Amount you would net after taxes should you sell the space today. E. Capital expenditure to outfit the space. Calculate the initial cash flow below: (Round to the nearest dollar.) 1 (1) $ 2 (2) $ 3 (3) $ 4…
Question 14 You have just completed a $20,000 feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for $100,000, and if you sold it today, you would net $115,000 after taxes. Outfitting the space for a coffee shop would require a capital expenditure of $30,000 plus an initial investment of $5,000 in inventory. What is the correct initial cash flow for your analysis of the coffee shop opportunity? Identify the relevant incremental cash flows below: (Select all the choices that apply.) A. Capital expenditure to outfit the space. B. Initial investment in inventory. C. Amount you would net after taxes should you sell the space today. D. Price you paid for the space two years ago. E. Feasibility study for the new coffee shop. Calculate the initial cash flow below:Round to the nearest dollar.) 1 (1) $ 2 (2) $ 3 (3) $ 4…
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QUESTION 4 Hook n' Crook, Inc. has a 2-year project with the following cash flows: I=-$1,000, C₁ = +$5489, and C₂ =-$-4490. Find the value of the LARGEST IRR of this project. Note: If you wish, you may use the calculator to find one of the IRRS, and then use a method given in your class notes to find the other one, so you can determine which one is the largest number. Give the answer as a percent with two decimals; e.g., 23.24 and, as always, do not include symbols in your answer.
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Intro The local franchise of Jiffy Lube is thinking of buying a new lift for $80,000 that would make it easier to access the oil filter in customers' cars and save labor. The savings would increase over the project's 3-year life, in line with the projected growth of the business: A Part 1 What is the project cash flow in year 3? 0+ decimals Submit Part 2 What is the NPV? 1 Year 2 Cost savings 0+ decimals Submit B The machine is to be linearly depreciated to zero and will have no resale value after 3 years. The company uses a discount rate of 11% and has a tax rate of 21%. 1 20,000 с 2 22,000 D 3 26,400 BAttempt 1/5 BAttempt 1/5
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