Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Another utilization of cash flow analysis is setting the bid price on a project. To calculate the bid price, we set the project NPV equal to zero and find the required price. Thus the bid price represents a financial break-even level for the project. Guthrie Enterprises needs someone to supply it with 146,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost you $1,860,000 to install the equipment necessary to start production; you’ll depreciate this cost straight-line to zero over the project’s life. You estimate that in five years this equipment can be salvaged for $156,000. Your fixed production costs will be $271,000 per year, and your variable production costs should be $9.10 per carton. You also need an initial investment in net working capital of $136,000. The tax rate is 35 percent and you require a return of 12 percent on your investment. Assume that the price per carton is $16.60. a. Calculate the project NPV. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $ b. What is the minimum number of cartons per year that can be supplied and still break even? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Quantity of cartons c. What is the highest fixed costs that could be incurred and still break even?
Milano Pizza Club owns three identical restaurants popular for their specialty pizzas. Each restaurant has a debt–equity ratio of 35 percent and makes interest payments of $60,000 at the end of each year. The cost of the firm’s levered equity is 16 p..
What must be the face value of the two zeros to fund the plan?
You purchase today a callable annual coupon rate bond under the following conditions: Bond characteristics: Coupon rate: 7.5% Maturity of bond: 20 years Call Premium: 8% Time to call period: 4 years Current YTM: 8.5% Expected hold assumptions: Expect..
Calculate the economic order quantity for Kabelo’ business. Calculate the reorder point in units for Kabelo’ business.
Suppose the firm can cut its requirements for working capital in half by using better inventory control systems.- By how much will this increase project NPV?
Discuss the main characteristics of defined contribution plans and defined benefit plans. How do these differ from a cash balance plan, and does the employee or employer bear the risk of poor investment performance inside each of these types of plans..
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a common practice with expensive, high-tech equipment). What would the lease payment have to be for both the lessor and the lessee to be indiffe..
Draw the curved line which illustrates how expected return and standard deviation change as you hold different combinations of two stocks. You start to invest 100% in stock A and 0% in stock B, then 99% in stock A and 1% in stock B, 98% in stock A an..
If you were on the utility regulatory commission, what rate of return would you allow Elk City to earn?
Estimate the present value of the cost of defaults on the contract. Assume that defaults are recognized only at the end of the life of the contract.
Under which economic circumstances a PLAM type loan is greatly needed? Briefly explain.
Smith Inc. issued a bond with an annual coupon rate of 10% with interest paid Semi Annually. The bond matures in 15 years. The par value of the bond is $1,000. If your required return for this type of bond is 5%, what is the price you are willing to ..
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd