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Mini Case Analysis: Aguilera Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implants as follows:
Year Unit Sales
1 108,000
2 127,000
3 115,000
4 98,000
5 84,000
Production of the implants will require $1,500,000 in net working capital to start and additional net working capital investments each year equal to 15 percent of the projected sales increase for the following year. Total fixed costs are $1,250,000 per year, variable production costs are $225 per unit, and the units are priced at $345 each. The equipment needed to begin production has an installed cost of $23,000,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and this qualifies as seven-year MACRS property. In five years, this equipment can be sold for about 20 percent of its acquisition cost. AAI is in the 25 percent marginal tax bracket and has a required return on all its projects of 18 percent. Based on these preliminary project estimates, what is the NPV of the project? What is the IRR?
Monroe, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project?
Oprah Winfrey has closed on a 42-acre estate near Santa Barbara, California, for $49,100,000. If Oprah puts 25% down and finances at 7.5% for 30 years, what would her monthly payment be?
VIP Chemical Industries is looking to set up a new plant and expand its operations. The company currently has an option to buy an existing building for £480,000, with the necessary equipments to operate the plant costing £320,000. Evaluate whether th..
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Melbourne Company manufactures and sells electronic staplers for $16 each. If 10,000 units were sold in December and management forecasts 4% growth in sales each month, the number of electric stapler sales budgeted for March should be:
A firm has total interest charges of $10,000 per year, sales of $1 million, a tax rate of 40 percent, and a net profit margin of 6 percent. What is the firm's times-interest-earned ratio? show work
Cornell Systems analyzed the project whose cash flows are shown below. It is 100% debt financed. The tax rate is 20%. The yield on company`s bond is 6,25% Year 0 1 2 3 Cash flows -$950 $500 $400 $300 Calculate the projects NPV, Profitability ratio an..
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