Computing the npv of the project

Assignment Help Accounting Basics
Reference no: EM131959080

Question: A company can purchase 2 warehouses Now, and 3 more 1 year from Now. The company expects to sell 1 warehouse per year for the next 5 years. In terms of today's value, the warehouses each cost $500,00, and sell for $650,000. The Tax rate is 35%.

a) Suppose Projected Inflation is 0% and the Opportunity Cost of Capital is 9%. What is the NPV of this project?

b) Suppose projected inflation is 4% per year and Opportunity Cost of Capital is 13%. The warehouses purchased Now will be the first to be sold. Recalculate the NPV.

Was given solutions that a) NPV = -520,802 and b) NPV = -938,270 but no clear steps. So a detailed solution would be greatly appreciated.

Reference no: EM131959080

Questions Cloud

How is a program evaluation conducted by a sociologist : How is a program evaluation conducted by a sociologist different than ones conducted by evaluators who are not sociologists?
What should the shares be trading for today : A company issued preferred shares two years ago, paying a $3.57 dividend, which offered investors an original yield of 7%.
How much economic profit will the investment create : Your company is looking at an investment that today costs $3,863 and returns after-tax cash flow exactly one year, two years, and three years from today.
Provide closures to allow functions to be passed : Provide closures to allow functions to be passed around like variables. Allow easy access to array slices and those which do not.
Computing the npv of the project : A company can purchase 2 warehouses Now, and 3 more 1 year from Now. The company expects to sell 1 warehouse per year for the next 5 years.
Explain why being a part of the roman empire is negative : Many of the rulers we have examined in this course follow set patterns of behavior, which we have discussed as "paradigms."
What is the general formula for the securities market line : Company Q has earnings of $3.00 per share, a market price of $25, and a beta of 1.25. The risk-free rate is 3% and the risk premium for the market.
Write an essay within the topic of deviance thorugh sex : Find one episode from two different tv shows of our choice and write an essay within the topic of deviance thorugh sex, gender sexuality.
Evaluate the supply chain and logistics operations : MAN203 - Logistics and Supply Chain Management - Analyse and evaluate the supply chain and logistics operations of a nominated enterprise

Reviews

Write a Review

Accounting Basics Questions & Answers

  At a sales volume of 41000 units thoma corporations sales

at a sales volume of 41000 units thoma corporations sales commissions a cost that is variable with respect to sales

  Indicate whether each item should be categorized as product

Indicate whether each item should be categorized as a product or period cost

  Royal petroleum co can buy a piece of equipment that can be

royal petroleum co. can buy a piece of equipment that can be financed with debt at a cost of 6 percent after-tax and

  What is the cost per equipment hour for traceable cost

Assume that a significant driver is equipment hours. Identify the expenses that would likely be traced to jobs using this driver.

  Contemporary designs inc is an interior-decorating firm

contemporary designs inc. is an interior-decorating firm. customers must pay 50 percent of their estimated bill before

  Stephen bosworth a super salesman contemplating retirement

stephen bosworth a super salesman contemplating retirement on his fifty-fifth birthday decides to create a fund on an 9

  What are the total manufacture cost

Tooley Inc has a beginning work in process of $26,000, direct Materials used $240,000, What are the total manufacture cost

  Calculate the federal income tax

H, age 45, and W, age 43, are married with two dependent children: M, age 18, and N, age 19. Both are full-time students at a local university. Calculate H and W's 2015 Federal income tax assuming they file a joint return

  What does crane record as the cost of the new truck

Crane Company purchases a new delivery truck for $50000. What does Crane record as the cost of the new truck

  Find out the element in the sample space

Obtain the sample space, assuming that balls of the same color are indistinguishable. Upon assigning equal probability to each element in the sample space, determine the probability of drawing two balls of different colors.

  Discuss about merchandise shipments due to the disaster

A major global disaster (in this case an oil spill) has caused environmental damage and has affected global transportation as well.

  What is jebs gross tax liability filing for the year

Let's return to the facts of the previous example where Jeb recognized a $48.000 25 percent net capital. What is Jeb's gross tax liability filing for the year?

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