User Account

All Pages

Calculate the NPV of the project using nominal values

Assignment Help Financial Accounting
Reference no: EM132994052

Question - You are considering purchasing a machine to produce golf balls. The cost of the machine is $100,000 and its expected life span is 8 years. The machine will have an annual production of 550,000 balls. The price of a golf ball is today $0.20, and it's expected to rise by 10% each year. The material used to produce a golf ball costs $0.08 and it's expected to rise by 2% a year. To operate the machine you'll need two workers, each earning an annual salary of $30,000. According to their contracts their salaries will rise by 7% a year starting in the third year. The real discount rate is 4%, the expected inflation is 5%, and the corporate tax rate is 40%.

Required -

a. Calculate the NPV of the project using nominal values.

b. Repeat the calculation using real values.

Reference no: EM132994052

Questions Cloud

How much is the ending inventory of plastic : How much is the ending inventory of plastic to be reported on the company's balance sheet at September 30
How much will you gain or lose after two years : Currently the bond is selling for face value. How much will you gain or lose after two years, the yield on the comparable preferred stock is 9 percent
Determine the amount of the adjusting entry : An analysis of receivables estimates uncollectible receivables as $25,000. Determine the amount of the adjusting entry for bad debt expense
Calculate the NPV of the project using nominal values : The real discount rate is 4%, the expected inflation is 5%, and the corporate tax rate is 40%. Calculate the NPV of the project using nominal values
Calculate the NPV of the project using nominal values : The real discount rate is 4%, the expected inflation is 5%, and the corporate tax rate is 40%. Calculate the NPV of the project using nominal values
What role does the cost of capital play : Question - What role does the cost of capital play in the time-adjusted rate of return method and in the net present value method
Prepare the disclosures and journal entries : Prepare the disclosures and/or journal entries Farmers Products should make in preparing its December 31, 2016, financial statements
Find the weekly standard deviation of the stock price : Company X's stock price closed at $98, $103, $58, $29, $4 over five successive weeks. Find the weekly standard deviation of the stock price
How much would you have earned in dividend payments : Assume PepsiCo issues a dividend of $0.43/share. If you owned $1,600 shares, how much would you have earned in dividend payments

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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