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Silver Bear Golf (SBG) is a manufacturer of top quality golf clubs with a specialty of putters. Currently, each putter they sell brings in $250 of revenue at a cost of $160. This past year, they sold 1,100 putters and they expect this number to grow each year by 12.5% until this model becomes obsolete after 15 more years. The foreman at the SBG factory recently brought to your attention a new technology that could lower the cost of production. This technology requires an upfront fixed investment of $162,000 and has the capacity to produce all the putters you want to sell per year at a unit cost of $142. There is no increased working capital need due to this new technology, and no value of the machine/technology after 15 years. What is the NPV of investing in the new technology? Ignore taxes and assume a discount rate of 10.0%. (Hint: Think incrementally; the difference between the world without and with this new technology! Also, ignoring taxes will be a big help if you think right. You are strongly encouraged to use a spreadsheet.) (Enter just the number in dollars without the $ sign or a comma and round off decimals to the closest integer, i.e., rounding $30.49 down to $30 and rounding $30.50 up to $31.)
Howell Petroleum is considering a new project that complements its existing business. Should Howell proceed with the project?
What are the short-run and long-run effects on the earnings of each of the following: Labor employed in the wheat industry? - Labor in the cloth industry?
York is taking out a $10,000,000 two-year loan at a variable rate of LIBOR plus 1.50%. The LIBOR rate will be reset each year at an agreed upon date. The current LIBOR rate is 4.00% per year. The loan has an upfront fee of 1.00%. What is the all-in-c..
What is the future value of a 3%, 5-year ordinary annuity that pays $650 each year? Round your answer to the nearest cent. If this were an annuity due, what would its future value be? Round your answer to the nearest cent.
What are examples of incremental cash flows?
Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent and the maximum allowable payback period is four years.
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A five-year project has an initial fixed asset investment of $260,000, an initial NWC investment of $20,000, and an annual OCF of −$19,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..
Broussard Skateboard's sales are expected to increase by 25% from $7.6 million in 2016 to $9.50 million in 2017. Its assets totaled $5 million at the end of 2016. Broussard is already at full capacity, so its assets must grow at the same rate as proj..
Your client is 35 years old; and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $15,000 per year; and you advise her to invest it in the stock market, which you expect to provide an average re..
Which of the following statements accurately descrives the relationship between earnings and dividends when all other factors are held constant?
Gross margin $535,000 Gross margin 25% Expenses $575,000 Set up a skeletal profit and loss statement in both dollars and percentage
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