Calculate the net present value of this project

Assignment Help Financial Management
Reference no: EM132063946

Year 0 Year 1 Year 2 Year 3 Year 4 Revenue 110000 450000 450000 320000 Cost of Goods Sold -55000 -225000 -225000 160000 Gross Profit 55000 225000 225000 160000 Selling, General and Admin -6200 -6200 -6200 -6200 Depreciation -72000 -72000 -72000 -72000 EBIT -23200 146800 146800 81800 Income tax (35%) 8120 -51380 -51380 -28630 Incremental Earnings -31320 95420 95420 53170 Capital Purchaes -280,000 Change to NWC -5,000 -5,000 -5,000 -5,000 A garage is installing a new "bubble-wash" car wash. It will promote the car wash as a fun activity for the family, and it is expected that the novelty of this approach will boost sales in the medium term. If the cost of capital is 10 %, by using the data in the table above, calculate the net present value? (NPV) of this project.

Reference no: EM132063946

Questions Cloud

How much should the minimum annual lease payments be : how much should the minimum annual lease payments be? Assume further that it can borrow at a before-tax rate of 7%.
The variance in the present value of the cash flows : The variance in the present value of the cash flows is 0.1. While the opportunity cost of the project is 7%, the (continuously compounded) risk-free rate is 2%.
Estimate which two debt restructures maximize firm value : Estimate which two debt restructures maximize firm value.
Earnings growth rate according to the plans of sports : What is the earnings growth rate according to the plans of Sports plc?
Calculate the net present value of this project : Calculate the net present value (NPV) of this project.
What factors does this literature attribute these biases to : What is the nature of this bias? What exactly is biased? What factors does this literature attribute these biases to?
What are the incremental free cash flows : The marginal tax rate is 40%. What are the incremental free cash flows associated with the new machine in year 2?
Take advantage of the state net metering policy : You will be able to take advantage of the state's net metering policy and sell your surplus power to the utility for an estimated $600 each year.
Expected to pay per share five years into the future : what price would an investor be expected to pay per share five years into the future?

Reviews

Write a Review

Financial Management Questions & Answers

  What should the stock price be after three years

An appropriate rate of return for the stock is 11% What should the stock's price be after 3 years?

  Business continuity and asset protection

Explain the strategy options that may be available in Business continuity planning process and how the Business Continuity Strategy may be optimized

  Coverage for damage to your auto of personal auto policy

According to Part D-Coverage for Damage to Your Auto of a Personal Auto Policy, the insurer's limit of liability for physical damage loss to covered auto is?

  What is rnbs duration gap

If RNB's assets have an average duration of five years and its liabilities have an average duration of three years, what is RNB's duration gap?

  Assume zero taxes-should the company buy or lease

Assume zero taxes. Equipment can be leased at $10,000 per year (first payment one year hence) for ten years or purchased at a cost of $64177.

  Name potential trade-off between two of these objectives

During ‘normal’ times, the Fed’s monetary policy is used to maintain 5 objectives (i.e. keeping certain things in line or bounded). Name 4 out of 5 of their objectives: Name a potential trade-off between two of these objectives that the Fed is requir..

  Security produced returns

A security produced returns of 11 percent, 7 percent, 9 percent, 13 percent, and -14 percent over the past five years, respectively. Based on these five years, what is the probability that this stock will earn more than 16.16 percent in any one given..

  What is the manufacturers rate

Should Grouper borrow from the bank or use the manufacturer's payment plan to pay for the equipment? Borrow From The Bank.

  Banks short term funds in covered interest arbitrage

the currency equivalent of the banks short term funds in a covered interest arbitrage.

  What is the annual equivalent cost of the helicopter

What is the annual equivalent cost of the helicopter that the military should purchase if the interest rate is 10.5%?"

  Calculate the yield using geometric average

If the pure expectations theory is correct, what is the yield today for 2-year Treasury securities? Calculate the yield using a geometric average.

  Stock has an annual return mean and standard deviation

Your portfolio allocates equal funds to the DW Co. and Woodpecker, Inc. DW Co. stock has an annual return mean and standard deviation of 10.5 percent and 45 percent, respectively. Woodpecker, Inc., stock has an annual return mean and standard deviati..

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