Advanced thermal ltd is proposing the construction of a new

Assignment Help Corporate Finance
Reference no: EM13382083

Advanced Thermal Ltd is proposing the construction of a new plant in Thailand. It has recently completed a $100,000, two-year study on its latest project. It estimated that 20,000 of its new geothermal heat pump could be sold annually over the next eight years at a price of $9,000 each. Subcontractors would install the pump at a cost of $7,200 per installation. Fixed costs of $12 million per annum will be incurred.The initial outlay includes $80 million to build production facilities and $3 million in land. The $80 million facility will be depreciated using the prime cost method over the project's life (fully depreciated at the end of the project). At the conclusion of the project the facilities (including the land) will be sold for an estimated value of $10 million. The firm is an ongoing profitable business and pays taxes at a 30% rate in the year of income. It uses a 15% discount rate on the new project. Using the NPV approach, determine whether the project should be undertaken (use the relevant tax rate in your analysis).

Reference no: EM13382083

Questions Cloud

Gray has a current capital structure consisting of 400000 : gray has a current capital structure consisting of 400000 of 12 annual interest debt and 50000 shares of common stock.
Using the apple inc write a report of 600 words that : using the apple inc write a report of 600 words that demonstrates your understanding of the cost of capital and risk.
Using the apple inc write a report of 600 words that : using the apple inc write a report of 600 words that demonstrates your understanding of the cost of capital and risk.
Let ckdenote a european vanilla call option with strike : let ckdenote a european vanilla call option with strike price k. assume that all options are identical except for
Advanced thermal ltd is proposing the construction of a new : advanced thermal ltd is proposing the construction of a new plant in thailand. it has recently completed a 100000
Allied constructions limited is considering entering into a : allied constructions limited is considering entering into a lease agreement that contains the following information for
1 under what conditions will one observe floating exchange : 1. under what conditions will one observe floating exchange rates operating in the gold standard system2. many
You are considering the following two stocks for your : you are considering the following two stocks for your portfolio and have observed the following.the risk free rate is
Brown ltd operates outdoor amusement centres in a number of : brown ltd operates outdoor amusement centres in a number of country towns. the company has decided to build another

Reviews

Write a Review

Corporate Finance Questions & Answers

  Present value of increasing perpetuity

A small production plant costs $50 million today. It is expected to have the following cash flows: Risk adjusted cost of capital is 15 percent and corporation is projected to increase at a constant rate of 3 percent for perpetuity after 4 year.

  Determine the firms annual lost cash discounts

For this problem, assume that a year consists of twelve 30-day months. Assuming that Eaton is able to raise the $250,000 it needs by stretching its accounts payable, determine the firms annual lost cash discounts

  Data processing system

This cost of capital was computed based upon the current after-tax cost of equity and debt funds in the bank's capital structure.

  International finance multiple choice questions1nbspnbsp

international finance multiple choice questions1.nbspnbsp companies typically want to participate in foreign direct

  A if a company is considering investing 200000 in new

a if a company is considering investing 200000 in new equipment for which the expected cash flows are as followscash

  Construct a conservative financing plan

Computation of net income - Construct a conservative financing plan with 80% of assets financial by long-term sources. If McKinsee's earnings before interest and taxes are $6,000,000, what will their net income be

  What is the average total profit generated for the month

What is the highest volume of our highest margin product sold in December, what is the average total profit generated for the month and what is the total number of commercial copiers sold during December

  Find the standard deviation of the return

The expected return on market is 12 percent and the risk free rate is 7 percent. The standard deviation of the return on the market is 15 percent. Ones investor creates a portfolio on the efficient frontier with an expected return of 10 percent.

  Prepare general journal entries to record the events

Equity transactions and adjustments, statement of changes in equity and prepare general journal entries to record the above events.

  Create a decision tree

Mark is looking at the predict of expected economic growth. He plans to invest 120,000 dollar in an investment whose return would depend on the economic conditions.

  As the prevalence of social media continues to rise

as the prevalence of social media continues to rise consumers are recognizing ways in which social media can direct

  A firm with a 14 wacc is evaluating two projects for this

a firm with a 14 wacc is evaluating two projects for this years capital budget. after-tax cash flows including

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd