Thirsty plc makes a revolutionary type of can called Soak. The can has a resealable top which allows the can to be sealed after opening to prevent gas escaping. In January 2019 the idea for this new product was launched, and a loan of £5 million was obtained from Sunshine Bank in order to finance this project.
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- SAP Inc. received a $1.5 million grant under its Small Business Innovation program. SAP invested the grant money and developed a system to remove metal contaminants from storm water in shipyards. The firm estimates that each shipyard spends $500,000 a year on storm water clean-up efforts. If SAP is able to sign up and retain four shipyards in the first year onwards, what is the present value (PV) of the project (net of investment) if the cost of capital for SAP is 14% per year? Assume a cost of operations and other costs for SAP equal 50% of revenue. $5.64 million $4.80 million $4.51 million $5.93 millionSea Farming is using a water pump to drain some ditches in case of heavy rain. The old pump is in need of replacement and the company has two offers. The first comes from Alstermo AB in Sweden. The offer amounts to an investment of £200 000 and a yearly operational cost of £50 000. The other offer comes from Offshore Equipment Ltd outside Birmingham. This offer amounts to only £90 000 and a yearly operational cost of £50 000. The pump from Alstermo AB will last for 9 years before needed to be replaces and the other pump will be replaced after 6 years. This is a tricky situation and you are asked to assist with full analyse of the offers and a proposal of what to decide for. The required rate Sea Farming is using for this type of investment is 12%.please show work i need to learn this. Cameron Industries is purchasing a new chemical vapor depositor in order to make silicon chips. It will cost $7,000,000 to buy the machine and $10,000 to have it delivered and installed. Building a clean room in the plant for the machine will cost an additional $3 million. The machine is expected to raise revenues by $3,000,000 per year, starting at the end of the first year, with associated costs (other than depreciation) of $1 million for each of those years. The machine is expected to have a working life of six years and will be depreciated over those six years. The marginal tax rate is 20%. What are the incremental free cash flows associated with the new machine in year 2? O $1,168,333 $831,667 $1,833,667 $1,165,000 O $665,334
- Pinder Co., Ltd. is considering investing $500, 000 to build a factory to produce electric bicycles. Pinder Co., Ltd. has signed a contract with a large retailer that guarantees that Pinder Co., Ltd. will get $50 for every bicycle sold, in addition to all production - related costs. This means that the annual cash flow generated by the production of bicycles will be $50 multiplied by the number of bicycles sold. In exchange for this guarantee, the retailer will take over the factory at a price of $200, 000 in five years. Pinder Co., Ltd. is expected to sell 7, 000 bicycles every year in the next five years. Assume that the discount rate of Pinder Co., Ltd. is 10%. How much do the sales of bicycles need to be reduced before this project reduces the wealth of the shareholders of Pinder Co., Ltd. ?York Bikes come up with a new mountain bike prototype and wishes to commence pilot production and test marketing. The pilot production and test marketing phase will last for 1 year and cost £708,701 now. Your management team believes that there is a 42% chance that the test marketing phase will be successful and that there will be sufficient demand for the new mountain bike. If the test marketing phase is successful then the firm can invest £3,500,000 in year 1 to build a plant that will generate expected annual after tax cash flows of £415,279 in perpetuity beginning in Year 2. If the test marketing phase is not successful then the firm can still go ahead and build a new plant, but the expected annual after tax cash flows would be only £300,000 in perpetuity beginning in Year 2. The firm has the option to sell the prototype mountain bike to a foreign competitor next year for £400,040. The firm’s cost of capital is 7.9% per annum. Compute the NPV of the project.You are evaluating a proposal to buy a new executive jet for your corporation. The new jet will cost £7.5 million to buy. You will need to pay for this jet as soon as you purchase it. If you buy the new jet, you will sell the old executive jet for £3.0 million, which you will receive immediately. If you buy the new jet, there will be immediate extra training costs totalling £200000, for air crew and ground staff, which will occur once only and will be paid immediately. The new jet is more fuel-efficient and buying it will lead to an estimated saving of £500000 per year on fuel. However, maintenance will be more expensive and therefore maintenance costs will be £100000 more per year than at present. All fuel and maintenance costs must be paid for in the year in which they are incurred. Based on the above information, what is the estimated payback period for the new jet in years? Enter your answer to 1 decimal place, without commas. For example, for 6.33 years enter 6.3
- Cameron Industries is purchasing a new chemical vapor depositor in order to make silicon chips. It will cost $6,000,000 to buy the machine and $20,000 to have it delivered and installed Building a clean room in the plant for the machine will cost an additional $3 million. The machine is expected to raise gross profits by $3,000,000 per year, starting at the end of the first year, with associated costs of $1 million for each of those years. The machine is expected to have a working life of six years and will be depreciated over those six years. The marginal tax rate is 20%. What are the incremental free cash flows associated with the new machine in year 0? OA-$6,000,000 OB. -$8,118,000 C. $1,003,333 OD. -$9.020,000An electric utility is considering a photovoltaic (PV) solar panel system to provide power to water conditioning pumps within the power plant. The project will be done in two phases. Phase 1 has an initial cost of $3 million. Phase 2 will cost $2.2 million at the beginning of year 3. The system will be put into service at the beginning of year 4. The annual savings using the PV panels is estimated to be $900,000, increasing by $120,000 per year through year 10. The utility’s Minimum Attractive Rate of Return (MARR) is 10%. 1. Determine if the cost of the PV system is justified. (Hint: Consider comparing the present worth of the costs and present worth of the savings.) 2. What is the actual rate of return for this project?Kelly's Corner Bakery purchased a lot in Oil City six years ago at a cost of 100000. Today, that lot has a market value of $120000. At the time of the purchase, the company spent $6,500 to level the lot and another $12,000 to install storm drains. The company now wants to build a new facility on the site at an estimated cost of $500000. What amount should be used as the initial cash flow for this project?
- United Pigpen is considering a proposal to manufacture high-protein hog feed. The project would make use of an existing warehouse, which is currently rented out to a neighboring firm. The next year’s rental charge on the warehouse is $125,000, and thereafter, the rent is expected to grow in line with inflation at 4% a year. In addition to using the warehouse, the proposal envisages an investment in plant and equipment of $1.35 million. This could be depreciated for tax purposes straight-line over 10 years. However, Pigpen expects to terminate the project at the end of 8 years and to resell the plant and equipment in year 8 for $450,000. Finally, the project requires an immediate investment in working capital of $375,000. Thereafter, working capital is forecasted to be 10% of sales in each of years 1 through 7. Year 1 sales of hog feed are expected to be $4.70 million, and thereafter, sales are forecasted to grow by 5% a year, slightly faster than the inflation rate. Manufacturing costs…In February 2021, Culverson Company began developing a new software package to be sold to customers. The software allows people to enter health information and daily eating and exercise habits to track their health status. The project was completed in November 2021 at a cost of $800,000. Of this amount, $300,000 was spent before technological feasibility was established. Culverson expects a useful life of two years for the new product and total revenues of $1,500,000. Determine the amount that Culverson should capitalize as software development costs in 2021.