· The company manager targets to reduce the current ratio in the year (2020) by 33%from the previous year (2019), this requiring to downsize the amount of the totalcurrent asset. To what level can the manager reduce the total current asset to achievethis target at (2020)? (Suppose the other things are fixed)

Current ratio is a liquidity measure which measures the ratio of current assets to current…

Answered: · The company manager targets to reduce…

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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Similar questions

You are analyzing a project and have developed the following estimates. The depreciation is $47,900 a year and the tax rate is 21 percent. What is the worst-case operating cash flow? Unit sales Sales price per unit Variable cost per unit Fixed costs -$2,545 $11,145 $88,855 $27,556 O $63,937 Base-Case Lower Bound Upper Bound 9,800 12,800 $34 $24 $ 9,200 11,300 $ 39 $25 $ 9,700 $44 $26 $ 10,200
Lipsion Ltd company is thinking about investing in one of two potential new productsfor sale. The projections are as follows: year revenue/ product s revenue/ product v0 (150,000) outlay (150000) outlay1 14000 150002 24000 253333 44000 520004 84000 63333 Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%
Financial statements Net operating revenues Operating expenses Operating income Non-operating items: Interest expense Other Net income Total assets Total shareholders' equity S 2020 33.8 28.9 4.9 (1.2) (0.6) 3.1 $ $ 200.0 78.0 - X
Solve c) What is the payback period (PB) for this project?
Suppose you sell a fixed asset for $212,000 when its book value is $112,000. If your company’s marginal tax rate is 30 percent, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?
7. What is the payback period? ?
Given the following information about a possible average-risk, new product investment, calculate the investment's net present value. Initial Cost Expected Life Salvage Value Annual Depreciation Incremental Annual Sales Incremental Annual Production Costs $200,000 10yrs 0 $20,000 $200,000 $110,000 Incremental Annual Selling & Admin Costs Tax Rate Expected Inventory Turnover (calculated as production costs / 4 times ending inventory) Average Collection Period Cost of Equity Cost of Debt Target Debt to Equity Ratio $20,000 50% 45 days 13% 8.5% 130% Hint: Assume the company is on a 360-day year. Net Operating Working Capital investment is only necessary at the onset of the project (year O), it is recalled in period 10. Please ignore the Accounts Payables and Accruals in the calculation of NOWC
F
Calculate the Payback period (PBP) and Profitability Index (PI) of the investment and state the Pro’s and Cons of this method The annual incremental profits/ (losses) relating to the investment are estimated as follows: Years CF’s (000) Year 0 -175,000 Year 1 K11,000 Year 2 K3,000 Year 3 K34,000 Year 4 K47,000 Year 5 K8,000 Investment at the start of the project would be K175, 000,000.the investment sum assuming nil disposal value after five years, would be written off using the equal instalment method. The depreciation has been included in the profit estimates above, which should be assumed to arise at each year end. Assume the cost of Capital is 12% Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 D.f 1.00 0.893 0.797 0.712 0.636 0.567

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