KYou are a manager at Northern Fibre, which is considering expanding its operations in synthetic fibre manufacturing. Your boss comes into your office, drops a consultant's report on your desk,and complains, "We owe these consultants $1.5 million for this report, and I am not sure their analysis makes sense. Before we spend the $21 million on new equipment needed for this project, lookit over and give me your opinion." You open the report and find the following estimates (in millions of dollars):Sales revenue-Cost of goods sold= Gross profit- General, sales, and administrative expenses- Depreciation= Net operating incomeIncome tax= Net income130.00018.000230.00018.00012.000 12.0001.6801.6802.1002.1008.22002.8778.22002.8775.3435.343...930.00018.00012.0001.6802.1008.22002.8775.3431030.00018.00012.0001.6802.1008.22002.8775.343***b. If the cost of capital for this project is 15%, what is your estimate of the value of the new project?Value of project = $ million (Round to three decimal places.)

The PV of a project refers to the measure of the total value of its cash flows calculated by…

Answered: You are a manager at Northern Fibre,…

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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Please give me answer very fast in 5 min saur
Suppose you have been hired as a financial consultant to Defense Electronics, Incorporated (DEI), a large, publicly traded firm that is the market share leader in radar detection systems (RDSs). The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs. This will be a five-year project. The company bought some land three years ago for $4.6 million in anticipation of using it as a toxic dump site for waste chemicals, but it built a piping system to safely discard the chemicals instead. The land was appraised last week for $7.7 million on an aftertax basis. In five years, the aftertax value of the land will be $8.1 million, but the company expects to keep the land for a future project. The company wants to build its new manufacturing plant on this land; the plant and equipment will cost $29.8 million to build. The following market data on DEI’s securities are current: Debt: 185,000 bonds with a coupon rate of 7.7 percent outstanding, 25…

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