What is the project best case npv

Assignment Help Finance Basics
Reference no: EM131548993

Question: Keystone Tool is evaluating a proposed project that costs $1,500,000, has a 6-year life, and no salvage value. Depreciation is straight-line to zero over the life of the project.Sales are projected at 100,000 units per year.Price per unit is $60, variable cost per unit is $25, and fixed costs are $2,100,000 per year.The tax rate is 40% and a 12% return is required.Suppose projections given for price, quantity, variable costs and fixed costs are all accurate to within plus or minus 10%. a) What is the operating cash flow under the best case scenario? b) If the project requires an investment of $250,000 in net working capital, which will be recovered at the end of the project, what is the project's best case NPV?

Reference no: EM131548993

Questions Cloud

Use for debt when calculating cost of capital : If the company has a $45.4 million market value of equity, what weight should it use for debt when calculating the cost of capital?
What rate of return would she have earned for the past year : Last year Janet purchased a $1,000 face value corporate bond with an 12% annual coupon rate and a 10-year maturity.
Compute the realized rate of return for an investor : Six years ago the Templeton Company issued 17-year bonds with a 13% annual coupon rate at their $1,000 par value. The bonds had a 8% call premium, with 5 years.
What is current price of the bond : A semi-annual step-up bond matures in 11 years and pays zero coupon payments for the first 5 years. what is the current price of the bond?
What is the project best case npv : Keystone Tool is evaluating a proposed project that costs $1,500,000, has a 6-year life, and no salvage value.
A coupon bond pays interest semi-annually : A coupon bond pays interest semi-annually, matures in 30 years, has coupon rate of 4% and is currently selling for $700. What is the annual YTM?
Calculate the investment rate for this t-bill : You are analyzing a U.S. T-Bill that matures in 49 days. The face value is $1,000 and the current price is $995.68.
Assuming all other bond characteristics are identical : Assuming all other bond characteristics are identical which bond would pay a higher coupon payment? Very briefly explain why.
What is the portfolios new beta : Suppose Stan holds a portfolio consisting of a $10,000 investment in each of 8 different common stocks, equally. The portfolio's beta is 1.25.

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the amount of the total fixed costs

At a production level of 6,000 units a project has total costs of $120,000. The variable cost per unit is $14.50. What is the amount of the total fixed costs?

  What is this firm debt-equity ratio

Jiminy Cricket Removal has a profit margin of 11 percent, total asset turnover of 1.13, and ROE of 14.33 percent. What is this firm's debt-equity ratio?

  Railway cabooses just paid its annual dividend of 370 per

railway cabooses just paid its annual dividend of 3.70 per share. the company has been reducing the dividends by 12.3

  What would be the price if comparable debt yields 8 and

a 1000 bond has a coupon of 6 and matures after 10 years.a. what would be the bonds price if comparable debt yields 8

  After insurance company reimbursed you for loss related to

1. the least expensive form of permanent insurance protection isa. term. b. straight life. c. limited payment.d.

  Which offer has a greater present value

Joey receives two job offers: Job A has a starting annual salary of $90,000 and an expected annual salary growth of 7%. Job B has a starting annual salary of $110,000 and an expected salary growth of 5%.

  Find the percentage decrease in its volume

Water in a container is originally at 100 kPa. The water is subjected to a pressure of 120 MPa. Determine the percentage decrease in its volume.

  Five annual payments-adjusted for inflation

You would like to receive an equivalent of $10,000 in today's dollars at the start of the year for the next five years. Assuming that inflation will average 3% over during that time and you can earn 5% on your investment. How much will you need to..

  What is the npv of buying the new lathe

What is the NPV of buying the new lathe

  What are the benefits of paying late but not too late and

what are the benefits of paying late but not too late and how do companies attempt to do

  Which fits into proposed project classifications

Which fits into proposed project classifications? A) expansion B) replacement C) Botha A and B d) Neither A and B

  Nominal required return on risk-free government securities

a. What is the UK's inflation rate if the equilibrium relationships hold? b. What is the UK's nominal required return on risk-free government securities?

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