A firm has projected the following financials for a possible project:YEARSalesCost of GoodsS&ADepreciationInvestment in NWCInvestment in Gross PPE01,130.00105,468.001132,716.00Submit549.00262,780.00 62,780.0030,000.00 30,000.00 30,000.0021,093.60 21,093.60 21,093.60Answer format: Currency: Round to: 2 decimal places.3132,716.00 132,716.00 132,716.00549.00What is the NPV of the project? (Hint: Be careful about rounding the WACC here!)462,780,00 62,780.00 62,780.0030,000.00549.0021,093.60549.005132,716.00The firm has a capital structure of 37.00% debt and 63.00% equity. The cost of debt is 9.00%, while the cost of equity isestimated at 15.00%. The tax rate facing the firm is 38.00%. (Assume that you can't recover the final NWC position inyear 5. i.e. only consider the change in NWC for each year)30,000.0021,093.60549.00

Net present is the difference between present value of all cash inflows and initial investment NPV…

YEAR Sales Cost of Goods S&A Depreciation Investment in NWC Investment in Gross PPE 0 1,130.00 105,468.00 1 2 21,093.60 21,093.60 549.00 3 132,716.00 132,716.00 132,716.00 132,716.00 62,780.00 62,780.00 62,780.00 62,780.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 21,093.60 21,093.60 549.00 549.00 4 132,716.00 62,780.00 549.00 21,093.60 549.00 The firm has a capital structure of 37.00% debt and 63.00% equity. The cost of debt is 9.00%, while the cost of equity is estimated at 15.00 %. The tax rate facing the firm is 38.00%. (Assume that you can't recover the final NWC position in year 5. i.e. only consider the change in NWC for each year)

YEAR Sales Cost of Goods S&A Depreciation Investment in NWC Investment in Gross PPE 0 1,130.00 105,468.00 1 2 21,093.60 21,093.60 549.00 3 132,716.00 132,716.00 132,716.00 132,716.00 62,780.00 62,780.00 62,780.00 62,780.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 21,093.60 21,093.60 549.00 549.00 4 132,716.00 62,780.00 549.00 21,093.60 549.00 The firm has a capital structure of 37.00% debt and 63.00% equity. The cost of debt is 9.00%, while the cost of equity is estimated at 15.00 %. The tax rate facing the firm is 38.00%. (Assume that you can't recover the final NWC position in year 5. i.e. only consider the change in NWC for each year)

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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Net Present Value Method The following data are accumulated by Paxton Company in evaluating the purchase of $131,700 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $44,000 $74,000 Year 2 27,000 57,000 Year 3 13,000 43,000 Year 4 (1,000) 29,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 a. Assuming that the desired rate of return is 12%, determine the net present value for the proposal. Use the table of the present value of $1 presented above. If required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value.…
Cash Flow Asset End of year Amount Appropirate Requried Retrun A 1 $5,000 18% 2 $5,000 3 $5,000 Using cell references to the given datea and the PV function, calculate the value of asset A.
None
Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $138,900 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $35,000 $60,000 Year 2 22,000 46,000 Year 3 11,000 35,000 Year 4 (1,000) 23,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 a. Assuming that the desired rate of return is 12%, determine the net present value for the proposal. Use the table of the present value of $1 presented above. If required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present…
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30
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>Unit-of-production method This method amortizes the costs of oil and gas industry activities and is dependent on the accounting method chosen by the owner of the assets. The following general formula shows the concept of unit-of- production amortization: [unamortized costs at end of period]+|production for period [Amortization for period]=! reserves at the beginning of period

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