Reference no: EM13180661
The Wheel Deal Inc., a company that produces scooters and other wheeled non-motorized recreational equipment is considering an expansion of their product line to Europe. The expansion would require a purchase of equipment with a price of euro 1,200,000 and additional installation of euro 300,000. The new product line is expected to increase net revenues by euro 300,000 for the next 10 years. The equipment is multipurpose and the firm anticipates that they will sell it at the end of the 10th year for euro 500,000. The initial investment (at year 0) also requires an increase in Net Working Capital of euro 100,000 (to be recovered at the end of 10th year). The current spot rate is $0.95/euro, and the expected inflation rate in the U.S. is 2% per year and 5% per year in Europe.
Use Spreadsheet to carry out the following calculations (show your formulas in each cell):
i. Based on the relative version of purchasing power parity relationship, calculate the expected appreciation/depreciation in euro and forecast the expected exchange rate for the next 10 years.
ii. Develop the timeline of cash flows (years 0 - 10) in euros
iii. Use the spot exchange rate and your forecasted exchange rate to calculate the timeline of future cash flows (years 0-10) in dollar terms.
iv. Compute the IRR of the project
v. Compute the NPV of the project at discount rates of (a) 8% (b) 9% (c) 11% (d) 12%.
vi. Plot in graph (you can use scatter with smooth lines option) the Net Present Values at above mentioned discount rates and show the IRR in the graph.
vii. Based on IRR and NPV calculations, comment if the project is acceptable or not at the above discount rates.
|
What is his marginal tax rate in percentage terms
: The income tax system in a country requires each citizen to pay 10% of income on earnings up to $40,000, and then pay 20% on any earnings over $40,000. If an individual has an income of $69971, then what is his marginal tax rate, in percentage te..
|
|
State balance equations for aluminum and potassium
: KOH are diluted to 1L to give the same species produced by Al(OH)3. Write mass balance equations for aluminum and potassium.
|
|
State what ionic compounds will precipitate out of solution
: The following three solutions are mixed: 90.0mL of 0.110M Na2SO4 , 45.0mL of 0.250M ZnCl2 , and 100.0mL of 0.20M Ba(CN)2. What ionic compounds will precipitate out of solution? Express as a chemical formula.
|
|
Define the quantitative species inventory for the system
: Give the quantitative species inventory for the system which ultimately results from mixing 2.55mols Cl2, 1.20mols Br2, 1.25mols I2,
|
|
Compute the irr of the project
: Based on the relative version of purchasing power parity relationship, calculate the expected appreciation/depreciation in euro and forecast the expected exchange rate for the next 10 years. ii. Develop the timeline of cash flows (years 0 - 10) in ..
|
|
Prepare an income statement for the year ended
: Prepare an income statement for the year ended December 31, 2011, and a balance sheet as of December 31, 2011 and prepare all journal entries to record the information for 2012. Also prepare any necessary adjusting entries.
|
|
How many mole of the weak acid were added to the beaker
: C.A. Yates was given a 50.0mL sample of the weak acid. The known concentration of the weak acid is .25M. After preparing a buret he delivers 25.0mL of the weak acid into a 100mL Erlenmyer flask. He then titrated this solution using a standardized ..
|
|
Find the aggegate marginal willingness to pay for abatement
: Starting from the uncontrolled level of pollution claculated in part c, find the marginal willingess to pay for polloution abatement, A, for each consumer class (Abatement is reduction in pollution; zero abtement would be associated with the unctr..
|
|
Write the neutralization equation
: A weak acid with the general formula of HA will react with a base, such as NaOH. Write the neutralization equation which describes the reaction.
|