Jemisons cfo estimates that the distribution center will

Assignment Help Finance Basics
Reference no: EM13478575

In the spring of 2010, Jemison Electric was considering an investment in a new distribution center. Jemison's CFO anticipates additional EBIT of $100,000 for the 1st year of operation of the center in 2011, and, over the next 5 years, the firm estimates that this amount will grow at a rate of 5% per year. The distribution center will require an initial investment of $400,000 that will be depreciated over a 5 year period toward a zero salvage value using straight line depreciation of $80,000 per year. Furthermore, Jemison expects to invest an amount equal to the firms annual depreciation expense to maintain the physical plant. These additional capital expenditures will also be depreciated over a period of 5 years toward a zero salvage value. Jemison's CFO estimates that the distribution center will need additional net working capital equal to 20% of new EBIT. Assuming the firm faces a 30% tax rate, calculate the project's annual project free cash flow for each of the next 5 years,

Reference no: EM13478575

Questions Cloud

What are the changes that the authors believe are coming as : please read the forensic article paradigm shift in forensic identification science michael j. saks in a 350 word
Aqua pure purchases 50000 gallons of distilled water each : aqua pure purchases 50000 gallons of distilled water each year. ordering costs are 100 per order and the carrying cost
Oreilly moving company has a 1000 par value convertible : oreilly moving company has a 1000 par value convertible bond outstanding that can be converted into 25 shares of
Ct computers inc is considering whether to begin offering : ct computers inc. is considering whether to begin offering customers the option to have their old personal computers
Jemisons cfo estimates that the distribution center will : in the spring of 2010 jemison electric was considering an investment in a new distribution center. jemisons cfo
Find the current price of the a bonds with 3 years to : the nickelodeon manufacturing co. has a series of 1000 par value bonds outstanding.each bond pays interest
Biotechnology is a truly vast subject i would like you to : biotechnology is a truly vast subject. i would like you to read the following articles which presents biotechnology in
Create an equally weighted portfolio of five computer : create an equally weighted portfolio of five computer software stocks. is such a portfolio a diversified portfolio?
Hhow much will recievables balance increase what would be : the new credit manager of kays dpartment store plans to liberalize the firms credit policy.the firm currently

Reviews

Write a Review

Finance Basics Questions & Answers

  Time value of money-analysis

Beverly started a paper route on January 1, 1995. Every three months, she deposits $300 in her bank account, which earns 8 percent annually but is compounded quarterly.

  Compute the capitalized equivalent amount

A group of concerned citizens has established a trust fund that pays 6% interest , compounded monthly, to preseerve a historical building by providing annual maintenance funds of $30,000 forever. Compute the capitalized equivalent amount for these..

  What is the market value per share after the dividend

Verbal Communications, Inc., has 14,000 shares of stock outstanding with a par value of $1 per share and a market value of $32 per share. The firm just announced a 100 percent stock dividend. What is the market value per share after the dividend?

  Calculate the profit or loss on bags

University Catering sells 50-pound bags of popcorn to university dormitories for $10 a bag. The fixed costs of this operation are $80,000, while variable costs of the popcorn are $.10 per pound.

  Calculate amount of sales assuming a fifo flow of inventory

Monroe marks up its goods at 40% on cost. At the end of the year, ending inventory showed 105 units remaining. calculate the amount of sales assuming a FIFO flow of inventory.

  Compute average annual rate of return

Suppose you are considering how to finance your child's college education. The child is 3 years old now so there are 15 years to go before your child enters college at age eighteen.

  Which one of following is an example of diversifiable risk

Which one of the following is an example of diversifiable risk? a. Income tax rates are revised by the federal government. b. The unemployment rate rises to 10.5 percent. c. The Fed lowers its discount rate. d. A CEO is fired for conduct unbecomin..

  Define the cash conversion cycle

Why is working capital management important to a company? Are there particular industries where managing working capital is more important?

  Which is most likely to raise the unemployment rate

According to Keynesian economics, which of the following is most likely to raise the unemployment rate?

  How to finding the price of the bond

How to Finding the price of the bond of the Mangold Corporation has two different bonds currently outstanding

  Finding net income and effective tax rate

Finding net income and effective tax rate from given financial ratios - Compute the Company's 2007 pro-forma net income (or adjusted net earnings) that is indicative of the Company's net income going forward

  What might happen to the company over the next decade

If Microsoft does not build a cloud computing system business, what might happen to the company over the next decade? Why did the company decide that it had little choice but to invest in cloud computing. Reference at least 2 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