Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Another utilization of cash flow analysis is setting the bid price on a project. To calculate the bid price, we set the project NPV equal to zero and find the required price. Thus, the bid price represents a financial break-even level for the project. The technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NPV to zero and solve for the variable in question. Guthrie Enterprises needs someone to supply it with 122,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost you $890,000 to install the equipment necessary to start production; you’ll depreciate this cost straight-line to zero over the project’s life. You estimate that, in five years, this equipment can be salvaged for $72,000. Your fixed production costs will be $327,000 per year, and your variable production costs should be $10.50 per carton. You also need an initial investment in net working capital of $77,000. Assume your tax rate is 34 percent and you require a return of 10 percent on your investment. a. Assuming that the price per carton is $17.20, what is the NPV of this project? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).) NPV $ 566,667.75 b. Assuming that the price per carton is $17.20, find the quantity of cartons per year you need to supply to break even. (Do not round intermediate calculations and round your final answer to nearest whole number.) Quantity of cartons c. Assuming that the price per carton is $17.20, find the highest level of fixed costs you could afford each year and still break even. (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).) Fixed costs $
A company is considering an investment project with the following cash flows: Year 0 = -$160,000 (initial costs); Year 1= $50,000; Year 2 =$80,000; and Year 3 = $65,000.The company has a 8% cost of capital, calculate the NPV for the project ______
A trader owns 55,000 units of a particular asset and decides to hedge the value of her position with futures contracts on another related asset. Each futures contract is on 5,000 units. What is the minimum variance hedge ratio? Should the hedger take..
Ryan Borrowed $15,000 now with a 7% interest rate compounded annually. He needs to pay them back over 7 years starting from the end of the first year, what will be Ryan’s annuity assuming that he will miss the 4th payment
Calculate the value of a company that earned $50,000 this year, has a 40% investment rate, K, and a tax rate of 40%;
Melanie receives an annuity paying $1,000 at the end of each month for eight years. This is directly deposited to a fund paying interest at an annual effective rate of 7.28%. Interest is paid out at the end of each year to a fund with an annual yield..
Fincher Manufacturing has projected sales of $146.4 million next year. Costs are expected to be $81.7 million and net investment is expected to be $15.7 million. What is your new estimate of the company’s stock price? What is your estimate of the cur..
St. Luke’s Convalescent Center has $200,000 in surplus funds that it wishes to invest in marketable securities. If transaction costs to buy and sell the securities are $2,200 and the securities will be held for three months, what required annual yiel..
Compute the minimum equity level A for which the project is financed by risk-neutral investors when the market rate of interest is 0. Discuss the difference between pH = 1 and pH.
Lee’s currently sells 13,800 motor homes per year at $87,900 each, and 1,100 luxury motor coaches per year at $139,900 each. The company wants to introduce a low-range camper to fill out its product line; it hopes to sell 7,200 of these campers per y..
Sykes Company for the year ended December 13,2014. The company sold merchandise and made collections on credit terms 2/10, n/30 (assume a unit sales price of $500 in all transactions and use the gross method to record sales revenue). Prepare Journal ..
Critically reflect on the importance of capital budgeting. Why is this such a heated subject in many boardrooms? How does capital budgeting promote the financial health of an organization? How will you use the financial techniques you have learned th..
Great Wall Pizzeria issued 4-year bonds one year ago at a coupon rate of 5.2 percent. If the YTM on these bonds is 7.6 percent, what is the current bond price?
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd