What is the base case npv

Assignment Help Accounting Basics
Reference no: EM13992970

1.We are examining a new project. We expect to sell 9,000 units per year at $35 net cash flow apiece for the next 10 years. In other words, the annual operating cash flow is projected to be $35 X 9,000 = $315.000. The relevant discount rate is 16 percent, and the initial investment required is $1,350,000.

a. What is the base-case NPV?

b. After the first year, the project can be dismantled and sold for $950,000. If expected sales are revised based on the first year's performance, when would it make sense to abandon the investment? In other words, at what level of expected sales would it make sense to abandon the project?

c. Explain how the $950,000 abandonment value can be viewed as the opportunity cost of keeping the project in one year.

Reference no: EM13992970

Questions Cloud

What is the strength of the magnetic field acting on it : A proton circles Earth at an altitude of 500 km traveling at a speed of 2.0 X 10^7 m/s above the equator. What is the strength of the magnetic field acting on it?
What speed must the small sphere have in order : A small sphere with charge q=+3.00 μC and mass 6.00 x 10-5kg is projected toward center of the large sphere from an initial large distance. What speed must small sphere have in order to come within 8.00 cm of surface of the large sphere?
Symbolic communication between you and the oil companies : Finally, from the symbolic interactionist perspective, you might view this act of putting gas in the car as a form of symbolic communication between you and the oil companies during which you insert a card that symbolizes money into a machine that..
Treatment for childhood anxiety disorders : Which of the following is the most common treatment for childhood anxiety disorders? Which of the following is not a documented potential cause of conduct disorder
What is the base case npv : Explain how the $950,000 abandonment value can be viewed as the opportunity cost of keeping the project in one year.
Research paper on disable veterans with substance abuse : Research paper on disable veterans with substance abuse
What fraction of the total energy of the cart-spring system : A cart attached to a spring vibrates with amplitude A. What fraction of the total energy of the cart-spring system is kinetic energy when the cart is at position x=A/4.5.
Similarities between motivational interviewing techniques : What are some of the similarities and differences between motivational interviewing techniques used in a counseling setting and persuasive techniques used in a business sales setting
What is the power consumption of the charger : A step down transformer connected to a 120V (rms) household circuit is used to charge the battery in a laptop computer. If the number of turns in the primary coil is 100 and that of the secondary is 10 and Irms = 2.00 mA. What is the power consumpt..

Reviews

Write a Review

Accounting Basics Questions & Answers

  Tanzlin manufacturings common stock has a beta of 15 if

tanzlin manufacturings common stock has a beta of 1.5. if the expected risk-free return is 9 and the expected return on

  Determine the tax consequences of the stock redemption

White Corporation decides to discontinue the business and distributes all of the $4 million of insurance proceeds collected as a result of the fire to Helen and Gray Corporation in redemption of 20 shares of stock from each shareholder. Determine ..

  Available common stock dividends

The board of directors plans to pay dividends in the amount of $1 million this year.What amount will go to preferred stockholders? How much will be available for common stock dividends?

  Fixed overhead costs per month are supervision 4000

thome company uses a flexible budget for manufacturing overhead based on direct labor hours. variable manufacturing

  Determining taxable income rules

In 2012, Warren sold his personal use automobile for a loss of $9,000. He also sold a personal coin collection for a gain of $10,000. As result of these sales, $1,000 is subject to income tax.

  Obtain an annual report from a starbucks be sure the

obtain an annual report from a starbucks . be sure the company has property and equipment intangible assets and

  Two divisions of a cmi are involved in a dispute division a

two divisions of a cmi are involved in a dispute. division a purchases part 101 and division b purchases part 201 from

  Harrison ford company has been approached by a new customer

harrison ford company has been approached by a new customer with an offer to purchase 10000 units of its model ij4 at a

  Comparing thes two companies that are us gaap publiclt

comparing thes two companies that are u.s. gaap publiclt traded dell vs hp what is their net profit margin and debit to

  Scope of the project

Why is quality management important to the scope of the project?

  A company reports pretax accounting income of 10 million

a company reports pretax accounting income of 10 million but because of a single temporary difference taxable income is

  On january 1 2010 trent company granted dick williams an

on january 1 2010 trent company granted dick williams an employee an option to buy 100 shares of trent co. stock for 30

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