Which is expected to produce operating cash flows

Assignment Help Financial Management
Reference no: EM131896541

Jasper Metals is considering installing a new molding machine which is expected to produce operating cash flows of $73,000 a year for 7 years. At the beginning of the project, $10,000 in net working capital will be needed. All net working capital will be recovered at the end of the project. The initial cost of the molding machine is $319,000. The equipment will be salvaged at the end of the project creating a $48,000 aftertax cash flow. At the end of the project, all net working capital will be recovered. What is the net present value of this project given a required return of 14.5 percent, and should the project be accepted?

Reference no: EM131896541

Questions Cloud

Equally invested in risk-free asset and two stocks : Aine would like to create a portfolio that is equally invested in a risk-free asset and two stocks.
Compute the value for the average collection period : Compute the value for the average collection period.
What is the net present value of this expansion project : What is the net present value of this expansion project at a required rate of return of 16 percent?
What is the oldest bond you can locate : What is the oldest bond you can locate? What is the story behind it? What is your favorite junk bond and why so?
Which is expected to produce operating cash flows : Jasper Metals is considering installing a new molding machine which is expected to produce operating cash flows of $73,000 a year for 7 years.
Generally accepted accounting principles : For a city government that follows generally accepted accounting principles (GAAP), which fund or funds should one look to find each of items listed below.
What is the adjusted present value of the project : What is the adjusted present value (APV) of the project?
Share of nondividend-paying stock : You own one share of a nondividend-paying stock. how much do you now pay your broker?
The loan be when repayment to the bank is included : What will the present value P of the loan be when repayment to the bank is included?

Reviews

Write a Review

Financial Management Questions & Answers

  What is maximum initial cost-initial aftertax cash savings

Scanlin, Inc., is considering a project that will result in initial aftertax cash savings of $1.77 million at the end of the first year, and these savings will grow at a rate of 1 percent per year indefinitely. The firm has a target debt–equity ratio..

  Is this arbitrarge opportunity

Is this an arbitrarge opportunity? If so, what would an investor's profit be if the investor borrowed $10,000?

  Present value of a perpetuity

What is the present value of a $600 perpetuity if the interest rate is 4%?

  What is the synergy from the merger

Hugo Comp. is analyzing the possible purchase of Vargas Inc. No one of the companies has any type debt. What is the synergy from the merger?

  What contract feature of a mutual fund investment makes

A community bank operating in a market like McGee, AR is least likely to face: The risk that an investment made by a financial instition will fail to be repaid is: What contract feature of a mutual fund investment makes it farless likely that funds s..

  Describe the three primary ways of incorporating dividends

How is the volatility of the underlying stock reflected in the binomial model?- Describe the three primary ways of incorporating dividends into the binomial model?

  What is the expected return on an equally weighted portfolio

Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stock B Stock C Boom 0.76 0.11 0.31 0.07 Bust 0.24 0.15 0.13 0.19. What is the expected return on an equally weighted portfolio of these three stocks?

  What is your target level of retirement income

If your real income is $40,000 a year, what is your target level of retirement income?

  Average daily sales and days of sales outstanding

average daily sales, days of sales outstanding, average daily cost of sales, inventory days of supply, days of payables outstanding, and cash-to-cash cycle time

  What is the standard deviation of a portfolio

Stock Q will return 18% in a boom and 9% in a normal economy. Stock R will return 9% in a boom and 5% in a normal economy. There is a 75% probability the economy will be normal. What is the standard deviation of a portfolio that is invested 40% in st..

  Common stock value-find the market value of lawrence shares

Common stock value: Variable growth Lawrence Industries’ most recent annual dividend was $1.80 per share (D0 = $1.80), and the firm’s required return is 11%.

  Approximately immunized from changes in interest rates

Suppose there are two bonds, a 30-year zero coupon bond and a 2-year zero coupon bond. Currently, the discount rate, y, is 4%. Suppose we are short $ 1000 in par value of the 30-year-zero coupon bond. How much of the 2-year zero coupon bond do we nee..

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