What is the npv of the proposed toad ranch today

Assignment Help Financial Accounting
Reference no: EM132539815

The Biological Insect Control Corporation (BICC) has hired you as a consultant to evaluate the NPV of its proposed toad ranch. BICC plans to breed toads and sell them as ecologically desirable insect control mechanisms. They anticipate that the business will continue into perpetuity.

Following the negligible start-up costs, BICC expects the following nominal cash flows at the end of the year:

Revenues$271,000

Labor costs 191,000

Other costs 61,000

The company will lease machinery for $96,000 per year. The lease payments start at the end of Year 1 and are expressed in nominal terms. Revenues will increase by 6 percent per year in real terms. Labor costs will increase by 5 percent per year in real terms. Other costs will increase by 3 percent per year in real terms. The rate of inflation is expected to be 8 percent per year. The required rate of return is 14 percent in real terms. The company has a 39 percent tax rate. All cash flows occur at year-end.

Question 1: What is the NPV of the proposed toad ranch today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM132539815

Questions Cloud

Find how much will each annual payment be : The savings account pays 13.19 percent per year, compounded annually. How much will each annual payment be? Round the answer to two decimal places.
Rulemaking process in healthcare assess general tools : Discuss the necessity of analysis in the rulemaking process in healthcare Assess general tools and frameworks used in policy analysis within healthcare.
Write a critical reflection and analysis : Write a critical reflection and analysis on the case scenario - purpose of this module is to prepare students for their 70-day practice placement
Project plan for completing project : Provide the final project plan for completing the project described below on time, on budget, and turned over to the owner.
What is the npv of the proposed toad ranch today : What is the NPV of the proposed toad ranch today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Find what is the npv of the investment : What is the NPV of the investment? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Find what is the project total nominal cash flow from assets : What is the project's total nominal cash flow from assets for each year? (A negative answer should be indicated by a minus sign.)
Explain computations why the might not be a good strategy : Riley Inc. Riley could borrow money from a bank at a rate of 16%. Explain through computations why this might not be a good strategy.
What are possible alternative actions that sony could take : If the breakeven point was higher than the number of units that might be able to be sold, what are the possible alternative actions that Sony could take?

Reviews

Write a Review

Financial Accounting Questions & Answers

  What are the taxes reported on the income statement

What are the 201x taxes reported on the income statement? (Answer in whole $s with no $ sign or commas needed, e.g. xxx000, or 123000)

  Vasquez publishing company

Vasquez Publishing Company sold 1,000 two-year subscriptions to a monthly magazine. The subscriptions sold for $18 each.

  Eligible risk for hedge accounting

Which of the following qualifies as an eligible risk for hedge accounting?

  Residual income of this years investment opportunity

Westerville Company reported the following results from last year’s operations: What is last year’s residual income? What is the residual income of this year’s investment opportunity? If the company pursues the investment opportunity and otherwise pe..

  Preparation of an income statement and computation of

preparation of an income statement and computation of earnings per share.tony rich inc. reported income from continuing

  How much cash was collected from making sales

Beginning and ending accounts receivable are $76,000 and $42,000, respectively. Sales for the period total $384,000, of which $40,000 was directly for cash. How much cash was collected from making sales and collecting accounts receivable?

  Amount of revenue or expense for january

Show how each transaction would he handled using the accrual basis of accounting. Give the amount of revenue or expense for January. Journal entries are not required. Use the following format

  Prepare journal entries to account for phds land

Prepare journal entries to account for PHD's land and equipment from 1 July 2018 to 30 June 2020. Journal entries SHOULD comply with AASB 116

  Relationship to future value when making financial decisions

Time value of money is an important aspect of money management. Why is it important to know what interest rates, terms of an agreement, and present value are in relationship to future value when making financial decisions?

  Selecting the appropriate revenue or gain classification

Caring Community Hospital, a not-for-profit hospital, recorded the following transactions. For each of the transactions, indicate which revenue classification would be affected by selecting the appropriate revenue or gain classification from the list..

  Philosophies is the use of temporal and current methods

One of the differences in the philosophies is the use of temporal and current methods. These two methods allow for use of different rates depending on the account/item. These different rates can create large discrepancies based on the method used and..

  What is the machines payback period

Caliber Lawnmower Company is considering the purchase of a new machine costing $800,000. The company’s management is estimating that the new machine will generate additional cash flows of $180,000 a year for 10 years and have a salvage value of $50,0..

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