Calculate NPV of this investment using an Excel spreadsheet

Assignment Help Financial Management

Reference no: EM13943780

Whoopie Cushions, Inc. is analyzing the proposed purchase of a new machine for $550,000. The proposed machine has an estimated economic life of six years but will be treated as five-year MACRS property for depreciation purposes. The machine will increase the firm's capacity, and it is expected to contribute $176,000 annually to earnings before depreciation, interest and taxes. The firm is in a 30% tax bracket and estimates its cost of capital to be 16%. Calculate the NPV of this investment using an Excel spreadsheet. Show and label your work. Formulas for NPV and IRR are pre programmed in Excel.

Reference no: EM13943780

Questions Cloud

Two different capital structures-What is the break-even EBIT : Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Kyle would have 715,000 shares of stock outstanding. Assume that EBIT is $1.6 million. Compute the EPS for both Pl..

Disengaged employees and counterproductive behaviors : Disengaged employees and counterproductive behaviors have become the norm in many organizations, and as a result, organizations are implementing more stringent policies, enforcing regular trainings, and installing cameras throughout the workforce

Perform statistical tests and then interpret output : Part A of Assignment #3 has you familiarizing yourself with a set of data, providing you the opportunity to perform statistical tests and then interpret the output. You will rely on all you have learned to this point and add correlation and regres..

Describe an algorithm for sorting : The integers are NOT sorted and you CANNOT sort them. You need to see if the numbers would match the pattern if you were to sort them.

Calculate NPV of this investment using an Excel spreadsheet : Whoopie Cushions, Inc. is analyzing the proposed purchase of a new machine for $550,000. The proposed machine has an estimated economic life of six years but will be treated as five-year MACRS property for depreciation purposes. Calculate the NPV of ..

Prepare the journal entry to record the write-off of default : The Rock has credit sales of $650,000 during 2010 and estimates at end of 2010 that 3 percent of these credit sales will eventually default. Prepare the journal entry to record the write-off of the defaulted $1,225 balance.

Aerotron electronics has just bought a used delivery : Aerotron Electronics has just bought a used delivery truck for $15,000. The small business paid $1,000 down and financed the rest, with the agreement to pay nothing for the entire first year and then to pay $586.83 at the end of each month over years..

What is the current price per share if the required return : Whistle Stop Trains pays a constant $16 dividend on its stock. The company will maintain this dividend for the next 14 years and will then cease paying dividends forever. What is the current price per share if the required return on this stock is 15 ..

New machine which will reduce manufacturing costs : Stanton Inc. is considering the purchase of a new machine which will reduce manufacturing costs by $5,000 annually and increase sales by $6,000 annually. Stanton will use the MACRS method to depreciate the machine, and it expects to sell the machine ..

User Account

All Pages