User Account

All Pages

Key financial management team

Assignment Help Finance Basics
Reference no: EM131757903

Scenario:

Once again, your team is the key financial management team for your company. The company's CEO is now looking to expand its operations by investing in new property, plant, and equipment. Your team recently calculated the WACC for your company, which will now be useful in evaluating the project's effectiveness. You are now asked to do some capital budgeting analysis that will determine whether the company should invest in these new plant assets.

The parameters for this project are:

Apple Inc. is looking to expand its operations and wants you to do some analysis using key capital budgeting tools for this. The parameters for this project are as follows.

The firm is looking to expand its operations by 10% of the firm's net property, plant, and equipment. (Calculate this amount by taking 10% of the property, plant, and equipment figure that appears on the firm's balance sheet.)

The estimated life of this new property, plant, and equipment will be 12 years. The salvage value of the equipment will be 5% of the property, plant and equipment's cost.

The annual EBIT for this new project will be 18% of the project's cost.

The company will use the straight-line method to depreciate this equipment. Also assume that there will be no increases in net working capital each year. Use the same marginal tax rate that you used in the Week 6 project.

The hurdle rate for this project will be the WACC for Apple Inc.= 8.47%

Deliverable for this Project

  • Your calculations for the amount of property, plant, and equipment and the annual depreciation for the project
  • Your calculations that convert the project's EBIT to free cash flow for the 12 years of the project.
  • The following capital budgeting results for the project
    • Net present value
    • Internal rate of return
    • Discounted payback period.
  • Your discussion of the results that you calculated above, including a recommendation for acceptance or rejection of the project

Reference no: EM131757903

Questions Cloud

Discussion-explaining uncertainties : Show Description The one sure thing about financial projections is that they will be wrong-perhaps by only a little, or perhaps by a lot.
Calculate madtack''s cost of goods sold after the overhead : Calculate Madtack's cost of goods sold after the overhead variance is closed for March
Identifies a current issue in homeland security : Your immediate supervisor has requested a memorandum from you that identifies a current issue in homeland security through the lens of scholarly research.
Describe the goals the team should strive to achieve : You are a group of managers in charge of food services for a large state university in the Midwest. Recently a survey of students, faculty.
Key financial management team : Once again, your team is the key financial management team for your company. The company's CEO is now looking to expand its operations.
Find out the overhead : ABC Company applies overhead to jobs using direct labor cost as an activity. For the month of June, ABC Company estimated it would incur
What are you going to do to address the problem : You were recently hired in a boundary-spanning role for the global unit of an educational and professional publishing company.
Annual cash flow associated with the perpetuity : How much is the annual cash flow associated with the perpetuity? (to the nearest dollar)
Globalization of financial markets : a) What is meant by the globalization of financial markets?

Reviews

Write a Review

Finance Basics Questions & Answers

  Describe the various types of financial intermediaries

Describe the various types of financial intermediaries, including the sources of their funds and the types of investments they make.

  Confidence interval for the proportion

Construct a 95 percent confidence interval for the proportion of those people opposed to the tax increase.

  The project is estimated to generate 1152000 in annual

summer tyme inc. is considering a new 5-year expansion project that requires an initial fixed asset investment of

  The quantitative research department

Having shown your skills in the quantitative research department, your boss wants youto continue your work on stock analysis. One of the tasks the research department isinvolved in is active portfolio management, i.e., identifying mispricings and tak..

  How much debt was outstanding

Brookman Inc's latest EPS was $2.75, its book value per share was $22.75, it had 315,000 shares outstanding, and its debt/total invested capital ratio was 44%. The firm finances using only debt and common equity and its total assets equal tota..

  Consequences to business behavior that ignores ethical

Businesses often encounter ethical dilemmas. Depending on the industry, there may be consequences to business behavior that ignores ethical standards.

  A firms operating income ebit was 400 million their

a firms operating income ebit was 400 million their depreciation expense was 40 million and their increase in net

  What is the expected rate of return ie the before-tax

niendorf incorporated needs to raise 25 million to construct production facilities for a new type of usb memory device.

  Provision for credit loss it is earnings season and i want

Provision for Credit Loss It is earnings season and I want you to look into annual report of bank of America and Citigroup. Using the last five years of Bank of America and Citigroup annual report, let us discuss the impact of loan loss provision on ..

  Who may claim a dependency exemption for francine

Assume Francine spends an equal number of days with her mother and her father and that Donna has AGI of $52,000 and Darren has AGI of $50,000. Who may claim a dependency exemption for Francine?

  Apply this transformation to the translation scheme

Consider translation during parsing as in Exercise 5.23. S. C. Johnson suggests the following method for simulating a separate stack for inherited attributes, using markers and a global variable for each inherited attribute.

  Annual percentage rate of return

Suppose you pay $9,800 for a $10,000 par Treasury bill maturing in 2 months. What is the annual percentage rate of return for this investment?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd