Compute operating cash flow and change in net working

Assignment Help Finance Basics
Reference no: EM13478525

Texas Roks, Inc. is considering a new quarry machine. The costs and revenues associated with the machine have been provided to you for analysis:


Cost of the new project

$4,000,000

Installation costs

$100,000

Estimated unit sales in year 1

50,000

Estimated unit sales in year 2

75,000

Estimated unit sales in year 3

40,000

Estimated sales price in year 1

$150

Estimated sales price in year 2

$175

Estimated sales price in year 3

$160

Variable cost per unit

$120

Annual fixed cost

$50,000

Additional working capital needed

$435,000

Depreciation method

3 years straight-line method, no salvage value

Texas Rok's tax rate

40%

Texas Rok's cost of capital

13%

Required:

  1. Calculate operating cash flow and the change in net working capital.
  2. Determine the NPV and IRR of the project.
  3. Should the company accept or reject the project based on the NPV? Why?
  4. Should the company accept or reject the project based on the IRR? Why?
  5. What is your final accept or reject decision? Why?
  6. What is the payback period for this project? Would this influence your decision to accept or reject?

Reference no: EM13478525

Questions Cloud

Robert gking introduced the new is-lm model and to discuss : please rephrase this followingthe new is-lm modelrobert g.king introduced the new is-lm model and to discuss how it
Ten rights are required to purchase one share tomorrow the : tricki corp stock sells for 45 rights-on and the subscription price is 35. ten rights are required to purchase one
Filer manufacturing has 75 millions shares of common stock : filer manufacturing has 7.5 millions shares of common stock outstanding. the current share price is 49 and the book
What is the net present value of the investment in the : a new furnace for your small factory will cost 4500 a year to install and will require ongoing maintenance
Compute operating cash flow and change in net working : texas roks inc. is considering a new quarry machine. the costs and revenues associated with the machine have been
In presentation format slides explain risk management : you are about to take over moneyplays bank a small but lucrative financial institution. you have hired new staff and
Do you think multiculturalism has led to decrease in social : do you think multiculturalism has led to decrease in social cohesion? whywhy not?1500 word essayat least 4 educational
You develop a lesson plan comparing financial risks of a : you are a senior financial consultant for 123 corporation. your ceo has asked that you train incoming consultants on
What required return should investors be demanding on : storico co. just paid a dividend of 2.05 per share. the company will increase its dividend by 24 percent next year and

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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