The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next six years:Year 1$400,000Year 2$20,000Annual Cash FlowsYear 4Year 3$180,000$300,000O $1,395,097O $1,775,000O $600,000O $1,975,000Year 5$350,000Year 6$725,000The CFO of the company believes that an appropriate annual interest rate on this investment is 9%. What is the present value of this uneven cash flow.stream, rounded to the nearest whole dollar?

Cash flow for year 1 = cf1 = $400,000Cash flow for year 2 = cf2 = $20,000Cash flow for year 3 = cf3…

Answered: The Purple Lion Beverage Company…

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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A start-up in the retail market plans to invest $200,000 in advertising in its first start-up and reduce that amount by $20,000 each year for the next five years. The company forecasts annual net revenue, excluding advertising spend, of $400,000 in the first year. Revenue is also expected to increase by $50,000 per year from the second through fifth periods. Calculate the uniform annual value for the net cash flow of this retail company for an interest rate of 8% per year.
Jacob Inc. is considering a capital expansion project. The initial investment of undertaking this project is $188,500. This expansion project will last for five years. The net operating cash flows from the expansion project at the end of year 1, 2, 3, 4 and 5 are estimated to be $28,500, $38,780, $58,960, $77,680 and $95,380 respectively. Jacob has a weighted average cost of capital of 18%. Based on Jacob’s weighted average cost of capital, what is the profitability index (PI)of undertaking this project? That is, what is the profitability index if the weighted average cost of capital is used as the discount rate? Shall Jacob undertake the investment project?
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someone solve this but not use excel
The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next five years: Year 1 $250,000 Annual Cash Flows Year 2 $20,000 Year 3 Year 4 $180,000 $450,000 Year 5 $550,000 The CFO of the company believes that an appropriate annual interest rate on this investment is 4%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar?
The Clayton Manufacturing Company is considering an investment in a new automated inventory system for its warehouse that will provide cash savings to the firm over the next eight years. The firms CFO anticipates additional earnings before interest, taxes, depreciation, and amortization (EBITDA) from cost savings equal to $220,000 for the first year of operation of the centre; over the next seven years, the firm estimates that this amount will grow at a rate of 6% per year. The system will require an initial investment of $600,000 that will be depreciated over an eight-year period using straight-line depreciation of $75,000 per year and a zero estimated salvage value. The firms tax rate is 35% and the cost of capital for the project is 12%. What is the projects annual free cash flow (FCF) in year 2? A. $169,250 B. $206,784 C. S 186,925 D. $177,830

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