Determine the present worth of project

Assignment Help Finance Basics
Reference no: EM132403329

A project will require the investment of $108,000 in equipment (straight-line depreciation with a depreciable life of 8 years and zero salvage value) and $25,000 in raw materials (not depreciable). Net annual project income before-tax depreciation will be $24,000. At the end of 8 years the project will be discontinued and the $25,000 investment in raw materials will be recovered. Assume a 34% combined income tax rate for this firm. The firm wants a 15% after-tax rate of return. Determine the present worth of this project and whether or not it should be undertaken.

Reference no: EM132403329

Questions Cloud

What range is the internal rate of return for new machine : Please calculate In what range is the internal rate of return for the new machine?
Distinguish between a forward and a futures contract : a) Distinguish between a forward and a futures contract? What is the Lombard window?
Forecast carlsbad additional funds needed : Now assume the company's assets totaled $4 million at the end of 2016. Is the company's "capital intensity" the same or different comparing to initial situation
Calculate her after-tax rate of return : Calculate her after-tax rate of return if she bought the churn and decide if she should buy it.
Determine the present worth of project : Determine the present worth of this project and whether or not it should be undertaken.
Determine if apple should continue with the cortland project : Determine if Apple should continue with the Cortland project. Use the following capital budgeting techniques.
What level of sales could earleton : What level of sales could Earleton have obtained if it had been operating at full capacity? Write out your answer completely.
How the sources of return for fixed income securities : Taking note of how the sources of return for fixed income securities are directly related to the risks associated with the investments.
What change in nwc occurs at the end of year 1 : The tax rate is 20 percent and the required return on the project is 10 percent. What change in NWC occurs at the end of year 1?

Reviews

Write a Review

Finance Basics Questions & Answers

  Explain what the staff should expect the auditors

Explain what the staff should expect the auditors to do. Be sure to include the requirements of the Sarbanes Oxley Act in your explanation.

  What is the current price

a. What is the current price? b. What will the price be in six years and in thirteen years?

  Dunkin weighted cost of capital

What will be Dunkin's weighted cost of capital for this new division if the after-tax cost of debt is 8 percent, the risk-free rate is 7 percent

  What is the present value of the dividends to be received

Three years from now it expects to pay a dividend of $2.50 and then $3.00 in the following two years. What is the present value of the dividends to be received over the next five years if the discount rate is 15 percent.

  Calculate the monetary value for both the jobs

Bill Mason is considering two job offers. Job 1 pays a salary of $41,900 with $4,875 of nontaxable employee benefits. Job 2 pays a salary of $40,000 and $6,530.

  The social use of media

The Social Use of Media: Cultural and Social Scientific Perspectives audience research) - What does this tell you about the media/culture connection

  The bank is using the simple interest formula for this one y

Tanya received a $1,000 loan from the bank for a vacation. The bank is using the simple interest formula for this one-year, 9% loan. What is her total interest?

  What is the cost of equity capital for acme tool

Acme Tool is an all-equity firm (i.e. it has no debt financing) with abeta of 1.25.If the risk-free rate is 4.5% and the market risk premiumis 9% (the expected return in the market is 13.5%), what is the cost of equity capital for Acme Tool.

  Find the amount of an annuity deposited

Find the amount of a $500 annuity deposited every 6 months for a 10 year period if annual interest rate is 12% and interest is compounded semiannually?

  Unbiased expectations theory

If the unbiased expectations theory is correct, what should the current rate be on 3-year Treasury securitie

  Financial position is given by the following data

Lowell Inc. has no debt and its financial position is given by the following data:

  Global finance-optimal financing-investment strategy

Employ foreign exchange and cost of capital data to determine appropriate capital sources. Please describe why and how you came to these conclusions. Also make sure to site sources.

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