Refined petroleum product did not yield estimated sales

Assignment Help Financial Management

Reference no: EM131341444

A project for a new refined petroleum product did not yield estimated sales and is being terminated with no ($0) market value, because the refining equipment will be converted to produce another product. The project had the following cash flows in actual dollars. The company uses a real interest rate i 15% for this product, and inflation is expected to maintain at a 3% average. The petroleum refining company uses MACRS depreciation and has a combined tax rate is 44%. Estimate the after tax cash actual dollar cash flows, convert the actual dollar cash flows to real dollars, and compute the net present worth in real dollars. Cash flows are in actual dollar x $1,000.

Reference no: EM131341444

Questions Cloud

Stock expected return and stock standard deviation : What comes closest to Stock A’s expected return and Stock B’s standard deviation?

What would risk-free rate have to be for two stocks : Stock Y has a beta of 1.4 and an expected return of 15.3 percent. Stock Z has a beta of .6 and an expected return of 8.3 percent. What would the risk-free rate have to be for the two stocks to be correctly priced?

Find the maximum value : ABC manufacturing decides to build a new plant, which will cost $2 million immediately and is expected to have a useful life of 10 years. At the end of 5 years a renovation expense of $X will be required to install new technology. Find the maximum va..

Hedge interest-rate risk on these bonds over coming year : If the portfolio you manage is holding $25 million of 6s of 2032 Treasury bonds with a price of 110, what forward contract would you enter into to hedge the interest-rate risk on these bonds over the coming year?

Refined petroleum product did not yield estimated sales : A project for a new refined petroleum product did not yield estimated sales and is being terminated with no ($0) market value, because the refining equipment will be converted to produce another product. The project had the following cash flows in ac..

Automated production line with an installed initial cost : Last fiscal year 01-Jan to 31-Dec, Norco, Inc., had a gross revenue of $32,718,166, cost of goods sold and interest expenses of $27,883,785, and total depreciation charges of $2,676,818. Also on October 1 of last year, Norco completed purchase of and..

Prepare the liabilities section of the balance sheet : Mar.1 Borrowed $120,000 from Lessburg Bank. The six-year, 10% note requires payments due annually, on March 1. Each payment consists of $20,000 principal plus one year's interest. Dec 1 Mortgaged the warehouse for $150,000 cash with Sage Bank. Prepar..

Calculate the price elasticity of demand for gasoline : Analyze gasoline price hike statistics in the following scenario. In June 2008, the U.S. retail gas price jumped from $3 to $4 a gallon. This is a 33% increase in price from January 2008. During that time, the total quantity of gasoline purchased fel..

Discount rate of bond : Bond was recently quoted at 98. Its face is $1,000 and its coupon is 5%. It matures in 15 years. Should you buy the bond if your discount rate is 6%? Why/why not? If your discount rate is 4%, should you buy the above bond? Explain.

User Account

All Pages