What is the net present value of investment

Assignment Help Financial Management
Reference no: EM131530511

Net Present Value: The Lees are considering adding a new piece of equipment that will speed up the process of building the bobble heads. The cost of the piece of equipment is $42,000. It is expected that the new piece of equipment will lead to cash flows of $17,000, $29,000, and $40,000 over the next 3 years. If the appropriate discount rate is 12%, what is the NPV of this investment? Explain the findings.

Reference no: EM131530511

Questions Cloud

Is inflation imposing a net cost on the economy : In the following examples, is inflation creating winners and losers at no net cost to the economy or is inflation imposing a net cost on the economy?
Determine the present worth of geometric gradient series : Determine the present worth of a geometric gradient series with a cash flow of $50,000 in year 1 and increases of 6% each year through year 8.
Explain different operations management principles : Explain different operations management principles and techniques that can make businesses more profitable today.
Suggest ways for the organization to improve its service : Suggest ways for the organization to improve its goods / service. Determine the element(s) of operations management that must be reevaluated.
What is the net present value of investment : The Lees are considering adding a new piece of equipment that will speed up the process of building the bobble heads. what is the NPV of this investment?
When would one-year loans have been especially attractive : The accompanying diagram shows the interest rate on one-year loans and inflation during 1998-2013 in the economy of Albernia.
Create new monthly budget for quadrupled production : create a new monthly budget for quadrupled production.
Analyze leadership theories and their evolution : Analyze leadership theories and their evolution. Illustrate methods of applying leadership theories. Evaluate impact of systems theory on leadership in field.
What must six-month forward rate be to prevent arbitrage : What must the six-month forward rate be to prevent arbitrage?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the equipments after-tax salvage value

Kasper Film Co. is selling off some old equipment it no longer needs because its associated project has come to an end. The equipment originally cost $22,500, of which 80% has been depreciated. The firm can sell the used equipment today for $7,500, a..

  Calculate the expected return on each stock

SML Suppose you observe the following situation: Return if State Occurs State of Probability of Economy State Stock A Stock B Bust .15 − .10 − .08 Normal .60 .09 .08 Boom .25 .32 .26 a. Calculate the expected return on each stock. (Do not round inter..

  Currently manufactures a fuel valve

Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below: Cost per Unit Variable costs Direct material $940 Direct labor 600 Variable overhead 300 Fixed costs Depreciation..

  Call premium would be incurred to call and refund the bonds

McCue Inc.'s bonds currently sell for $1,400. They pay a $90 annual coupon, have a 25-year maturity, and a $1,000 par value, but they can be called in 5 years at $1,050. Assume that no costs other than the call premium would be incurred to call and r..

  What is the graduates net annual cost of maintaining

A UCF graduate writes 22 checks per month and pays $0.25 per check. The bank pays the graduate 1% interest per annum, and he/she maintains an average monthly balance of $600. What is the graduate's net annual cost of maintaining the checking account ..

  What price must each widget be sold for the company

The Orion Company will produce 75,000 widgets next year. Variable costs will equal 25 percent of sales, while operating fixed costs will total $110,000. At what price must each widget be sold for the company to achieve an EBIT of $120,000?

  Increase the length of time company will extend credit

Which one of the following will tend to increase the length of time a company will extend credit?

  Desired increase in purchasing power

You would liike to increase your purchasing power next year by about 4%. If you expect prices to increase at a rate of 2% over the next year, what approximate increase would you need in your salary in order to achieve your desired increase in purchas..

  Marketplace about future prospects for the firm

A stock dividend is a lower cost alternative to a cash dividend and can be considered at all but the initial stages of a corporate life cycle. A poison pill strategy should be considered long before an invasive corporate raider attempts to buy your f..

  Calculate the present value of revenues-maintenance costs

Erin is considering investing in a new plant that is expected to bring in $1,000,000 in revenues per annum provided that it is adequately maintained. Calculate the present value of revenues and the present value of maintenance costs. (Hint: you first..

  How may shares are outstanding now

If the company's stock currently sells for $39 per share and a 10 percent stock dividend is declared, how many new shares will be distributed? Show how the equity accounts would change. the company declares a four-for-one stock split. how may shares ..

  Affect the value of share of preffered stock

Which of the follwoing affect the value of a share of preffered stock? Groups of related numeric values in an Excel worksheet are ___?

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