Sparky Inc. is evaluating a project that costs $150 using the WACC method. Their WACC is 11.5% and the project has EBIT of $75 per year each year for six years. The tax rate is 30%. Calculate the NPV of the project.
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Sparky Inc. is evaluating a project that costs $150 using the WACC method. Their WACC is 11.5% and the project has EBIT of $75 per year each year for six years. The tax rate is 30%. Calculate
the NPV of the project.
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- We are evaluating a project that costs $604,000, has an 8-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 55,000 units per year. Price per unit is $36, variable cost per unit is $17, and fixed costs are $685,000 per year. The tax rate is 21 percent and we require a return of 15 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent. Calculate the best-case and worst-case NPV figures. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)A 5-year project is expected to provide annual sales of $237,000 with costs of $99,500. The equipment necessary for the project will cost $380,000 and will be depreciated on a straight-line method over the life of the project. You feel that both sales and costs are accurate to +-15 percent. The tax rate is 21 percent. What is the annual operating cash flow for the worst-case scenario? Multiple Choice $143,185 $52,215 $105,590 $65,210 $84,710The FernRod Motorcycle Company invested $350,000 at 4.5% compounded monthly to be used for the expansion of their manufacturing facilities. How much money will be available for the project in 5 1/2 years? (Round your answer to the nearest dollar.)
- A 7-year project is expected to provide annual sales of $221,000 with costs of $97,500. The equipment necessary for the project will cost $360,000 and will be depreciated on a straight-line method over the life of the project. You feel that both sales and costs are accurate to +/-15 percent. The tax rate is 35 percent. What is the annual operating cash flow for the worst-case scenario?firm is considering purchasing a machine that costs $77,000. It will be used for six years, and the salvage value at that time is expected to be zero. The machine will save $41,000 per year in labor, but it will incur $16,000 in operating and maintenance costs each year. The machine will be depreciated according to five-year MACRS. The firm's tax rate is 35%, and its after-tax MARR is 18%. What is the present worth of the project?Munch N' Crunch Snack Company is considering two possible investments: a delivery truck or a bagging machine. The delivery truck would cost $43,056 and could be used to deliver an additional 95,000 bags of pretzels per year. Each bag of pretzels can be sold for a contribution margin of $0.45. The delivery truck operating expenses, excluding depreciation, are $1.35 per mile for 24,000 miles per year. The bagging machine would replace an old bagging machine, and its net investment cost would be $61,614. The new machine would require three fewer hours of direct labor per day. Direct labor is $18 per hour. There are 250 operating days in the year. Both the truck and the bagging machine are estimated to have 7-year lives. The minimum rate of return is 13%. However, Munch N' Crunch has funds to invest in only one of the projects. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 1.833 1.736 1.690 1.626 1.528 2.673 2.487 2.402 2.283…
- We are evaluating a project that costs $845,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 51,000 units per year. Price per unit is $53, variable cost per unit is $27, and fixed costs are $950,000 per year. The tax rate is 22 percent, and we require a return of 10 percent on this project. Calculate the accounting break-even point. What is the degree of operating leverage at the accounting break-even point? Calculate the base-case cash flow and NPV. What is the sensitivity of NPV to changes in the quantity sold? What is the sensitivity of OCF to changes in the variable cost figure? Give typing answer with explanation and conclusionYou are responsible to manage an IS project with a 4-year horizon. The annal cost of the project is estimated at $40,000 per year, and a one-time costs of $120,000. The annual monetary benefit of the project is estimated at $96,000 per year with a discount rate of 6 percent. a. Calculate the overall return on investment (ROI) of the project. b. Perform a break-even analysis (BEA). At what year does break-even occur?You are evaluating a new project that costs $15 million over its 5-year life. Depreciation is straight-line to zero over the life of the project and the salvage value is zero. The project is expected to have the following base case estimates: Unit sales/year: 250,000; Price/unit: $40; VC/unit: $15; FC/year: $900,000. The required return is 14 % and the corporate tax rate is 30%. The firm has no debt. The base case NPV is $946,661.1003. Calculate the sensitivity of the NPV to changes to changes in variable costs/unit
- NikulSuppose you are considering an investment project that requires $800,000, has a six-year life, and has a salvage value of $100,000. Sales volume is projected to be 65,000 units per year. Price per unit is $63, variable cost per unit is $42, and fixed costs are $532,000 per year. The depreciation method is a five-year MACRS. The tax rate is 35% and you expect a 20% return on this investment.(a) Determine the break-even sales volume.(b) Calculate the cash flows of the base case over six years and its NPW.(c) lf the sales price per unit increases to $400, what is the required break-even volume?(d) Suppose the projections given for price, sales volume, variable costs, and fixed costs are all accurale to wi thin ± 15%. What would be the NPW figures of the best-case and worst-case scenarios?Your firm requires an average accounting return (AAR) of at least 15 percent on all fixed asset purchases. Currently, you are considering some new equipment costing $96,000. This equipment will have a 3-year life over which time it will be depreciated on a straight line basis to a zero book value. The annual net income from this project is estimated at $5,500, $12,400, and $17,600 for the 3 years. Should you accept this project based on the accounting rate of return? Why or why not? a. no; because the AAR is equal to 15 percent b. yes; because the AAR is less than 15 percent c. yes; because the AAR is greater than 15 percent d. yes; because the AAR Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
