What is the npv of the project

Assignment Help Finance Basics
Reference no: EM133121475

Question 1: Capital Budgeting, Write Code = All-Ill- As the CEO of Nu Life, a medical device start-up, you are looking to improve the company's financial performance by incorporating advanced technologies found in other industries. One such improvement is the implementation of a new centralized testing software. The software will cost $500,000 immediately and can be amortized for tax purposes over a 3-year period, with no salvage value. You estimate the software will lower development costs by $35,000 per year for 10 years. While the upfront investment occurs immediately, other expenses begin one full year from today.

a. If NuLife's cost of capital is 10% and the tax rate is 30%, what is the NPV of the project? Please round your answer to the nearest dollar [e.g. $1,504].

b. The government has just passed a law allowing software purchases to be completely expensed on initial purchase. What is the NPV of the project under the new tax law? Does this change your recommendation? Please round your answer to the nearest dollar {e.g. $1,504}.

Reference no: EM133121475

Questions Cloud

Price of equity shares using waltirs model : Find out the price of equity shares using waltirs model - companies which are identical expect in term of r
Prepare a communication for the employees : The Director of Finance, Tina Colin, has requested that you, as the Payroll Manager, prepare a communication for the employees
Negotiate a contract that has a present value : A baseball player is offered a 5-year contract that pays him the following amounts:
What the markup percentage for setting prices : Wilde has an annual target operating income of $990,000. What the markup percentage for setting prices as a percentage of the full cost of the product
What is the npv of the project : a. If NuLife's cost of capital is 10% and the tax rate is 30%, what is the NPV of the project? Please round your answer to the nearest dollar [e.g. $1,504].
What is the value of the stock : The current riskifree rate is 4 percent and the market risk premium is 5 percent. You are trying to value ABC company and it has an equity beta of 0.8.
What will be the general journal entry on march : The amount of office supplies in the supplies cabinet equals $80.00. Based on the above information, what will be the general journal entry on March
Who do you think is represented in debt range : A substantial fraction of borrowers owe less than $5,000. Who do you think is represented in this debt range and why might the number of borrowers in this range
Financial research on facebook and general motors : Complete financial research on Facebook and General Motors using a web page such as investing.com or finance.yahoo.com or Bloomberg.com.

Reviews

Write a Review

Finance Basics Questions & Answers

  Prepare a simple income statement and a balance sheet

Practice Makes Perfect Inc. was started on July 1 of the current year. Practice Makes Perfect provides piano lessons for students of all abilities.

  Purple haze machine shop is considering the four-year

purple haze machine shop is considering a four-year project to improve its production efficiency. buying a new machine

  Company cost of retained earnings financing

If the market price of the common stock is ?$49 and dividends are expected to grow at a rate of 5?% per year for the foreseeable? future

  What is the annual compound growth rate in the cost

The cost of dry cleaning a dress shirt was 1.10 in mid-2011. Ten years earlier it was .70. what is the annual compound growth rate in the cost of dry cleaning shirts?

  Forward contract instead of a future

When would you use a Forward contract instead of a Future? When would you use a bond option rather than an interest rate forward contract?

  Downsides to the use of financial leverage

1- Discuss the concept of a firm's "target" capital structure. How might this be determined? 2- Explore the upsides and downsides to the use of financial leverage.

  Compute taxable value for the particular piece of property

Given the following information, compute the taxable value for the particular piece of property in dollar terms. Market value of property: $400,000.

  What is the cost of preferred equity

Preferred stock of Future Motors pays a dividend of $4 each year and trades at a price of $25. What is the cost of preferred equity (preferred stock capital) for Future Motors?

  Explain the concept of incremental cash flow

Discuss and explain the concept of incremental cash flow. Why is this important to distinguish from other cash flows?

  Operating and a cash budget

What is the relationship between an operating and a cash budget?

  What developments have made marketing research

What developments have made marketing research increasingly important in healthcare

  What would you be willing to pay for ntt bond

Suppose the face value of the ABC bond is $1000 and the maturity is 11 years.

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