Use for your upcoming expansion of your operations

Assignment Help Financial Management
Reference no: EM132070129

Your are the CFO of a firm. You have to determine which machine you want to use for your upcoming expansion of your operations. Your company was awarded a grant that requires you to make 500,000 products. Each product sells for 18$, so you will make a gross total of 9$ million.

Style A is a high tech machine that has the capacity to complete needed products in 5 years. During 5 years, machine can generate 450,000$ CF each quarter. In addition, when 5 years are up, you can sell machine and software for 120,000$.

Style B require 10 years to make necessary products. During first 5 years, you can generate 280,000$ per quarter. However, machine will slowly break down over the last five year and will only generate 170,000$ each quarter. At the end of ten years, the machine wil be all used up and cannot be sold.

1. Which machine is worth more today? The interest rate is 6% compounded quarterly.

2. Suppose the firm can invest exactly half of each CF during each time period at a rate of 6% compounded quarterly, which one would generate the most money by time 20?

Show your work.

Reference no: EM132070129

Questions Cloud

Return on your investment : How much do you have to invest today to have $15,000 in 3 years if you can get 9% return on your investment?
Exculpatory agreement-what could they do to hedge : An exculpatory agreement. ABC is worried about an increase in three-month LIBOR 3 months from now. What could they do to hedge?
Is the company liable for the architect fees : A key issue in the law of agency is the authority of the agent. Is the company liable for the architect’s fees?
Additional experience actually lower predicted ln wage : what level of exper does additional experience actually lower predicted ln(wage)?
Use for your upcoming expansion of your operations : ou have to determine which machine you want to use for your upcoming expansion of your operations.
Calculate probability that the nav of mutual fund : Calculate the probability that the NAV of the mutual fund a year from now (after the dividend distribution) will be between $50 and $60?
Which option would provide the highest amount of money : Which option would provide the highest amount of money in your investment account at your retirement which you can assume is exactly 40 years from today.
Entrepreneur starting biotechnology firm : You are an entrepreneur starting a biotechnology firm.
Unless otherwise stated by contract : Unless otherwise stated by contract, the law of partnership presumes which of the following not to be true?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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