Reference no: EM131063180
A company is evaluating a continuous baking oven. New oven would cost $685,000, including cost of equipment, shipping and installation. No increase in capcity with new oven, however operating expenses would be reduced by $105,000. 7 year MACRS schedule to a value of zero will be used, however the oven can be sold in year 10 for $30,000. Cost will increase by 5% per year over the 10 year economic life.
Given partial balance sheet: Current liabilities= $1,000,000; Mortage Bond= $5,143,000; Common Stock(500,000 shares)= $500,000; Contributed capital in excess of par= 2,000,000; Retained earnings= $8,640,210; total liablities and common equity= $17,283,210
Cost of capital= 11.27%
What is the NPV of the oven?
|
Calculate the weights on the minimum variance portfolio
: Assessment 2 aims to provide students with an opportunity to analyze various investment alternatives based on the respective risk and return so as to choose the most appropriate investment opportunity. Calculate the weights on the optimal risky port..
|
|
During the three years of operation-cedi cash flows
: Brower, Inc. just constructed a manufacturing plant in Ghana. The construction cost 8.5 billion Ghanian cedi. Brower intends to leave the plant open for three years. During the three years of operation, cedi cash flows are expected to be 3 billion ce..
|
|
Annual effective interest rate remains
: Pierre receives a thirty-year annuity paying $300(1.03)t + $100(1.02)2t + $70t − $60 at the beginning of the t-th year. Find the value of this annuity at the end of the tenth year if the annual effective interest rate remains 5% during the thirty yea..
|
|
What is the NPV of the oven
: A company is evaluating a continuous baking oven. New oven would cost $685,000, including cost of equipment, shipping and installation. No increase in capcity with new oven, however operating expenses would be reduced by $105,000. What is the NPV of ..
|
|
What is the NPV of the packing machine
: A project being considered is a semiautomated packing until that would cost $390,000 including installation. This project would use the 7 year MACRS schedule with no residual value. Wrapping machine was purcashed four years ago for $90,000 the wrappe..
|
|
Find accumulated value of this annuity at end of fifty years
: Serena receives a fifty-year annuity-due that has payments that start at $1,000 and increase by 3% per year through the twenty-fourth payment, then stay level at $2,000. Find the accumulated value of this annuity at the end of fifty years if the annu..
|
|
Equipment that will be added to an ongoing asset pool
: HFX Ltd. has the opportunity to undertake the following project: The project requires an immediate $1,000,000 investment in equipment that will be added to an ongoing asset pool with a 20% CCA rate. The market value of the equipment then is expected ..
|
|
Determine whether sodaco should build the plant
: Sodaco is considering producing a new product: Chocovan soda. Sodaco estimates that the annual demand for Chocovan, D(in thousands of cases), has the following mass function: P(D 30) .30, P(D 50) .40, P(D 80) .30. Considering the reward for each acti..
|