Briarcrest condiments, Briarcrest Condiments is a

Briarcrest condiments

Assignment Help Finance Basics

Reference no: EM1339371

Briarcrest Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires new machinery that would cost $1,976,521, have a life of five years, and would produce the cash flows shown in the following table.

Year Cash Flow

1 $397,441

2 -301,161

3 620,612

4 793,978

5 564,127

What is the NPV If the discount rate is 16.94 percent? (Enter negative amounts using negative sign e.g. -45.2$. Round answer to 2 decimal places, e.g. 15.25.)

NPV is

Question 2

Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $11.80 million. This investment will consist of $2.60 million for land and $9.20 million for trucks and other equipment. The land, all trucks, and all other equipment is expected to be sold at the end of 10 years at a price of $5.19 million, $2.47 million above book value. The farm is expected to produce revenue of $2.07 million each year, and annual cash flow from operations equals $1.94 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 10 percent. Calculate the NPV of this Investment. (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.)

NPV $

The project should be

Question 3

Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money, the cost of the system continues to decline. The Bell Mountain's opportunity cost of capital is 11.2 percent, and the costs and values c investments made at different times in the future are as follows:

Year Cost Value of Future Savings (at time of purchase) 0 $5,000 $7,000 1 4,450 7,000 2 3,900 7,000 3 3,350 7,000 2,800 7,000 5 2,250 7,000

Calculate the NPV of each choice. (Round answers to the nearest whole dollar, e.g. 5,275.) The NPV of each choice is:

NPV0 = $

NPV1= $

NPV2 = $

NPV3 = $

NPV4 = $

NPV5 = $

Suggest when should Bell Mountain buy the new accounting system?

Bell Mountain should purchase the system in

Question 4

Chip's Home Brew Whiskey management forecasts that if the firm sells each bottle of Snake-Bite for $20, then the demand for the product will be 15,000 bottles per year, whereas sales will be 83 percent as high If the price is raised 15 percent. Chip's variable cost per bottle is $10, and the total fixed cash cost for the year Is $100,000. Depreciation and amortization charges are $20,000, and the firm has a 30 percent marginal tax rate. Management anticipates an increased working capital need of $3,000 for the year. What will be the effect of the puce increase on the firm's FCF for the year? (Round answers to nearest whole dollar, e.g. 5,275.)

At $20 per bottle the Chip's FCF is $ ______ and at the new price Chip's FCF is $ _____

Question 5

Capital Co. has a capital structure, based on current market values, that consists of 40 percent debt, 3 percent preferred stock, and 57 percent common stock. If the returns required by investors are 11 percent, 11 percent, and 18 percent for the debt, preferred stock, and common stock, respectively, what is Capital's after-tax WACC7 Assume that the firm's marginal tax rate Is 40 percent. (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)

After tax WACC =

Reference no: EM1339371

Questions Cloud

Causes the present account balance to increase in the short : Monetary expansion causes the present account balance to increase in the short run. Describe this statement. Is the same true for fiscal expansion.

Inventory conversion period of 50 days : Inventory conversion period of 50 days

Explain should managers consider race in the hiring equation : Explain Should Managers Consider Race in the Hiring Equation and The issue of diversity is a major topic for government suppliers that have to supply census data about their workforce relative to the race of candidates that they hire for opportunit..

Compute the equilibrium ratio : The energies of glycolysis shows that there is a large drop in free energy upon oxidation of glycerladehydes 3-phosphate to 1,3-bisphosphoglycerate. In the presence of oxygen, some of this energy is ultimately converted into ATP production. though..

Briarcrest condiments : Briarcrest Condiments is a spice-making firm. Recently, it developed a new process for producing spices.

Describe the historical process of trade barrier reduction : Identify and define three components of a country's balance of payments. Describe the historical process of trade barrier reduction.

Which culture had a shorter generation time : Flask A includes yeast cells in glucose-minimal salts broth incubated at 30C with aeration. Flask B contains yeast cells in a glucose-minimal salt broth incubated at 30C in an anaerobic jar.

The overall reaction of aerobic respiration of glucose : The overall reaction of aerobic respiration of glucose is summarized as.

Explain common employment law terminologies : Explain Common Employment Law Terminologies and Demonstrate your understanding of the following terms by using them correctly in a paragraph you create.

User Account

All Pages