The plant holds an inventory of 250, has accounts receivable outstanding of 100, and accounts payable outstanding of 100. There will be immediate, one-time reductions of inventory and accounts payable by 20%. What is the working capital?

A factory costs $970,000. You reckon that it will produce an inflow after operating costs of $187,000 a year for 15 years.   a. If the opportunity cost of capital is 11%, what is the net present value of the factory? (Do not round intermediate calculations. Round your answer to 2 decimal places.)           b. What will the factory be worth at the end of eight years? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

A project requires an initial investment in equipment of $90,000 and then requires an investment in working capital of $10,000 at the beginning (t = 0). The project is expected to produce sales revenues of $120,000 for three years. Manufacturing costs are estimated to be 60% of the revenues.The assets are depreciated using straight-line depreciation. At the end of the project, the firm can sell the equipment for $10,000. The corporate tax rate is 30% and the cost of capital is 15%. Calculate the NPV of the project. A. 8443    C. –2735B. 3840    D. None of the above

A project requires an initial investment in equipment of $90,000 and also requires an initial investment in net working capital of $20,000 (at t = 0), net working capital is recovered at the end of the project. The research and development (R&D) costs so far have totaled about $100,000. You expect the project to produce sales revenue of $120,000 per year for three years. You estimate manufacturing costs at 60% of revenues. (Assume all revenues and costs occur at year-end, i.e., t = 1, t = 2, and t = 3.) The equipment depreciates using straight-line depreciation to zero over three years. At the end of the project, the firm can sell the equipment for $10,000. The corporate tax rate is 30% and the cost of capital is 16.5%. Calculate the NPV of the project.

Consider an order delivery business that will be a 5-year project. The required net working capital is $6.6 million and it will be returned at the end of the life of the project. Required equipment (net capital spending) will cost $15 and it will be depreciated straight-line to 0 over the 5-year life of the project. The business will have sales of $3 million in year 1, $6 million in year 2, and $10 million in years 3, 4, and 5. Costs are 30% of sales and the tax rate is 20%. (If there is a loss at the EBIT line, assign taxes of 0 for that year and do not carry tax losses forward.) The equipment has no salvage value. Create an income statement for years 1, 2, and 3, 4, and 5 (3, 4, and 5 will have the same income statement). Use the information from the income statement to calculate the operating cash flow using EBIT + depreciation – taxes for each year. Put all cash flows (net working capital, net capital spending, and operating cash flows) on a timeline. Using total cash flows from…

Consider equipment for the expansion of a production line that will cost $600,000 up front (i.e., today, t = 0). The production line will be depreciated using a 3-year straight-line schedule. At the end of Year 3, the used equipment will have no value. The new line will generate earnings according to the schedule below. What is the Average Accounting Return (AAR) of the new production facility? Answer with a number rounded to three decimal places, e.g., 4.0877% should be entered as 4.088. Year 01 Earnings = $24,500 Year 02 Earnings = $26,000 Year 03 Earnings = $27,250

. The year-end operating and maintenance costs of a certain machine are estimated to be P12,000 the first year and to increase by P2,500 each year during its 4-year life. If capital is worth 12%, determine the equivalent uniform year-end costs.

A fixed capital investment of P10,000,000 is required for a proposed manufacturing plant and an estimated working capital of P2,000,000. Annual depreciationn is estimated to be 10% of the fixed capital investment. Determine the rate of return on the total investment and the payout period if the annual profit is P2,500,000.Ans. 12.50%, 4.8 years

JECO company is planning to build a new plant in Batangas City. The plant is expected to provide additional sales as follows: First Year P 2.0 million Second Year P 2.5 million Third Year P 3.0 million (maximum capacity) The financial manager of JECO estimates that for every peso of sales, P0.25 must be invested in current assets. If all discounts are taken and bills are paid on time, accounts payable average P 0.04 per peso of sales. Other current liabilities, such as wages payable, typically average P0.05 per peso of sales. Required: a. Estimate the working capital investments required for the new plant in the 1st, 2nd & 3rd year of operations. b. How do these requirements affect the associated cash flows and the viability of the project?

A temporary warehouse can be built for $10 million and its salvage value when decommissioned is zero. The annual revenue from the sale of storage space minus maintenance and operating costs is estimated at $3 million. If the TMAR is 13% per year and the warehouse is used for 8 years, does the investment matter? What is the minimum useful life for the construction to be interesting?