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The Campbell Company is considering adding a robotic paint sprayer to its production line. Ths sprayer's base price is $930,000, and it would cost another $16,000 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81% and 7.41%), and it would be sold after 3 years for $699,000. The machine would require an increase in net working capital (inventory) of $8,000. The sprayer would not change revenues , but it is expected to save the firm $358,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 40%. what is the year zero net cash flow? what are the operating cash flows in years 1, 2, AND 3? (ROUND TO THE NEAREST DOLLAR) What is the additional year 3 cash flow? If the projects cost of capital is 15%, what is the NPV of the Project?
Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. FCF yr1 -$22.32 yr2 $37.9 yr3 $43.8 yr4 $52.4 yr5 $55.2 The weighted average cost of capital is 9%, and the FCFs are expected to continue growing at a 5% rate after Year 5...
A one-year Treasury security has a yield of 4.0000% and a two-year Treasury security has a yield of 4.8000%. Suppose the one-year security does not have a maturity risk premium, but the two-year security does and it is 0.4000%. What is the market's e..
Deep Mines has 14 million shares of common stock outstanding with a beta of 1.15 and a market price of $42 a share. There are 900,000 shares of 9 percent preferred stock outstanding valued at $80 a share. What discount rate should the firm apply to a..
Maintaining a constant dividend payout ratio is a dividend policy avoided by most firms because:
Dye Trucking raised $150 million in new debt and used this to buy back stock. After the recap, Dye's stock price is $5.5. If Dye had 60 million shares of stock before the recap, how many shares does it have after the recap? Enter your answer in milli..
The overhead costs for a company are presently SX per month. The management team of the company, in cooperation with the employees, is ready to implement a comprehensive improvement program to reduce these costs. If you (a) consider an observation of..
what incremental free cash flows should be included to account for the need to accelerate the purchase of the tank? cars?
what is the expected rate of return for this stock, based on the Discounted Cash Flow model?
Which of the following financial ratios has the highest weight in Altman's Z-score estimation? If a firm decided to speed up its collection from its customers by reducing the receivables period and kept the inventory period and payable period the sam..
Camp Manufacturing turns over its inventory five times each year, has an average payment period of 35 days and has an average collection period of 60 days. The firm has annual sales of $3.5 million and cost of goods sold of $2.4 million. Calculate th..
A company wishes to select the best of three possible computers, each expected to meet the University's growing need for computational and storage capacity. The three computers— A, B, and C—are equally risky. Calculate the NPV for each computer over ..
How is the European Central Bank organized? What special problems does it confront? What difficulties did it encounter during the financial crisis of 2007-2009?
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