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Mike's landscaping is considering a new 4-year project. The necessary fixed assets will cost $157,000 and be
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- Pear Orchards is evaluating a new project that will require equipment of $249,000. The equipment will be depreciated on a 5-year MACRS schedule. The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company plans to shut down the project after 4 years. At that time, the equipment could be sold for $67,100. However, the company plans to keep the equipment for a different project in another state. The tax rate is 21 percent. What aftertax salvage value should the company use when evaluating the current project?.We are evaluating a project that costs $953,000, has a life of ten years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 134,000 units per year. Price per unit is $37, variable cost per unit is $23, and fixed costs are $957,765 per year. The tax rate is 24 percent, and we require a return of 17 percent on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 14 percent. Calculate the best case npv and worst case npvA proposed project requires an investment of $250,000 and will require an additional $60,000 for upgrades in year five. The income from the project is expected to be $65,000 in years one through four and $50,000 in years six through seven. In year five, revenue to be in ye of the $60,000 spent for upgrades). There is not salvage value. If the external reinvestment rate of 8% is available, what is the rate of return for this project using the ERR method? $250,000 $65,000 $65,000 $65,000 $65,000 TITT $60,000 $50,000 $50,000
- Mountain Frost is considering a new project with an initial cost of $230,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $20,500, $21,400, $24,600, and $17,400, respectively. What is the average accounting return?We are evaluating a project that costs $1,920,000, has a 6-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 94,500 units per year. Price per unit is $38.43, variable cost per unit is $23.60, and fixed costs are $839,000 per year. The tax rate is 23 percent and we require a return of 12 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. Note: 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. Best-case NPV Worst-case NPVWe are evaluating a project that costs $2,130,000, has a 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 90,600 units per year. Price per unit is $38.85, variable cost per unit is $23.95, and fixed costs are $860,000 per year. The tax rate is 25 percent, and we require a return of 11 percent on this project. a. Calculate the base-case operating cash flow and NPV. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. What is the sensitivity of NPV to changes in the sales figure? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. c. If there is a 450-unit decrease in projected sales, how much would the NPV change? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. d. What is the sensitivity…
- The lovely company has a new 4-year project that will have annual sales of 9,300 units. The price per unit it $20,80 and the variable cost per unit is $8.55. The project will require fixed assets of $103.000, which will be depreciated on a 3 year MACRS schedule. The annual depreciation percentages are 33.33 percent, 44.45 percent, 14.81 percent, 7.41 percent, respectively. Fixed costs are $43,000 per year and the tax rate is 34 percent. What is the operating cash flow for year 3?Bad Company has a new 4-year project that will have annual sales of 8,400 units. The price per unit is $19.90 and the variable cost per unit is $7.65. The project will require fixed assets of $94,000, which will be depreciated on a 3-year MACRS schedule. The annual depreciation percentages are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. Fixed costs are $34,000 per year and the tax rate is 25 percent. What is the operating cash flow for Year 3? $20,705 $80,655 $57,550 $55,155 $60,744Solar Wind is considering a new project. The project will require $325,000 for new fixed assets and $195,000 for additional inventory. Long-term debt is expected to increase by $300,000. The project has a 5-year life. The fixed assets will be depreciated straight-line to a zero book value over the life of the project. At the end of the project, the fixed assets can be sold for 25% of their original cost. All inventory is expected to be recovered at the end of the project. The project is expected to generate annual sales of $565,000 and costs before depreciation of $302,000. The tax rate is 35%, and the required rate of return is 15%. The company has other ongoing profitable operations. In the field specified below, provide your answer to the following question: What is the MIRR of the project? For any credit, show all work in your Excel worksheet. In a new Excel worksheet, a) Answer the questions below and b) Place the company name at the top of the page. c) Use this information…
- We are evaluating a project that costs $520,000, has a life of 6 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 73,000 units per year. Price per unit is $45, variable cost per unit is $30, and fixed costs are $840,000 per year. The tax rate is 21 percent, and we require a return of 15 percent on this project. Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b-1. Calculate the base-case cash flow and NPV. (Do not round intermediate calculations and round your NPV answer to 2 decimal places, e.g., 32.16.) b-2. What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) a. C. What is the sensitivity of OCF to changes in the variable cost figure? (A negative answer should be indicated by a minus sign. Do not…Wendy and Wayne are evaluating a project that requires an initial investment of $795,000 in fixed assets. The project will last for eight years, and the assets have no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 143,000 units per year. Price per unit is $36, variable cost per unit is $28, and fixed costs are $798,975 per year. The tax rate is 30 percent, and the required annual return on this project is 21 percent. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 14 percent. Required: (a)Calculate the best-case NPV. (Do not round your intermediate calculations.) (Click to select) # (b)Calculate the worst-case NPV. (Do not round your intermediate calculations.) (Click to select) +Dog
