Reference no: EM133061890
Project 1: This new project will make avocado chips. It will cost $25,000,000 today for a new building and machines. We would invest in NWC equivalent of 10% of capital expenditure cost today. We know that this project will bring in sales of $14,000,000 in the first year, growing at a rate of 25% for the first 2 years and growing at a rate of 12% for the next 4 years. We employ a MACRS 7-year depreciation scale for all CAPEX. In year-end 3, we will have to purchase $9,000,000 in new machines. Net working capital account will be 25% of sales for each year. Costs of goods sold will be 50% of sales until we get the new machines at which they will drop to 38% of sales. After year 6, we are quitting the entire project and liquidating all, we can sell the original machines for $4million and the new machines for $4million. This project is in line with a new product division that has similar risk levels to existing operations. Input all information onto the table.
Project 1 Info
Capex, year 0
NWC, year 0
Sales, year 1
sales growth, yr 1 2
sales growth, next 4
Capex, year 3
COGS, yrs 1, 2, 3
COGS, yrs 4, 5, 6
NWC % of sales
SV, original
SV, new
|
What is estimated intrinsic value
: A company has EBIT of $5.46 per share and a tax rate of 22.4%. Their ROIC is 23.7% and an analyst is assuming the long-run GDP growth rate of 2.46% will apply t
|
|
Marginal corporate tax rate
: It plans to hold this exact amount of debt forever. What is the present value of the firm's interest tax shield, assuming a 21 percent marginal corporate tax ra
|
|
Compute the balance of the margin account
: Compute the balance of the margin account at the each of the each four trading days, and compute your total profit or loss at the end of the trading period
|
|
Research a company that went bankrupt
: Research a company that went bankrupt because of this and explain how and why as it is related to financing
|
|
Find new product division
: Project 1: This new project will make avocado chips. It will cost $25,000,000 today for a new building and machines. We would invest in NWC equivalent of 10% of
|
|
Difference between goals and objective
: Explain your understanding of each term and the important differences between them. Also consider if they are functionally related to each other
|
|
Significant leadership roles
: There are a number of individuals who have played some significant leadership roles in the fight against the COVID-19.
|
|
What is the point of indifference between the two options
: What is the point of indifference between the two options? Compute the new CM ratio and the new break-even point in both units and dollars
|
|
What is rhye required return on equity
: Consider Rhye, amid-size pharmaceutical company. Rhye's equity has a book value of $2.8 billion and a market value of $19.4 billion. Rhye's debt, on the other h
|