Briarcrest condiments is a spice-making firm, Financial Accounting

Assignment Help:

1. Briarcrest Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires new machinery that would cost $2,218,246. have a life of five years, and would produce the cash flows shown in the following table.
Year Cash Flow
1 $560,363
2 -186,636
3 850,806
4 712,176
5 871,134

2. What is the NPV if the discount rate is 14.82 percent? (Enter negative amounts using negative sign e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25.)
NPV is $

3. Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $11.80 million. This investment will consist of $2.80 million for land and $9.00 million for trucks and other equipment. The land, all trucks, and all other equipment is expected to be sold at the end of 10 years at a price of $5.09 million, $2.19 million above book value. The farm is expected to produce revenue of $2.05 million each year, and annual cash flow from operations equals $1.86 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 10 percent. Calculate the NPV of this investment. (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.)
NPV $
The project should be .
4. Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money, the cost of the system continues to decline. The Bell Mountain's opportunity cost of capital is 10.2 percent, and the costs and values of investments made at different times in the future are as follows:
Year Cost Value of Future Savings
(at time of purchase)
0 $5,000 $7,000
1 4,650 7,000
2 4,300 7,000
3 3,950 7,000
4 3,600 7,000
5 3,250 7,000
Calculate the NPV of each choice. (Round answers to the nearest whole dollar, e.g. 5,275.)
The NPV of each choice is:
NPV0 = $
NPV1 = $
NPV2 = $
NPV3 = $
NPV4 = $
NPV5 = $
Suggest when should Bell Mountain buy the new accounting system?
Bell Mountain should purchase the system in .

5. Chip's Home Brew Whiskey management forecasts that if the firm sells each bottle of Snake-Bite for $20, then the demand for the product will be 15,000 bottles per year, whereas sales will be 83 percent as high if the price is raised 15 percent. Chip's variable cost per bottle is $10, and the total fixed cash cost for the year is $100,000. Depreciation and amortization charges are $20,000, and the firm has a 30 percent marginal tax rate. Management anticipates an increased working capital need of $3,000 for the year. What will be the effect of the price increase on the firm's FCF for the year? (Round answers to nearest whole dollar, e.g. 5,275.)
At $20 per bottle the Chip's FCF is $ and at the new price Chip's FCF is $ .





Problem 13.11

Capital Co. has a capital structure, based on current market values, that consists of 33 percent debt, 8 percent preferred stock, and 59 percent common stock. If the returns required by investors are 10 percent, 13 percent, and 19 percent for the debt, preferred stock, and common stock, respectively, what is Capital's after-tax WACC? Assume that the firm's marginal tax rate is 40 percent. (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)
After tax WACC= %

 

 


Related Discussions:- Briarcrest condiments is a spice-making firm

Capital expenditures of the firms - corporate stockholders, The concern upp...

The concern uppermost in Sonia Burdett's mind at present was how to effectively communicate to the firm's Board of Directors the soundness of her financial policies. Ms. Burdett is

Dividend, Between 1986 and 2000 Textron dividend changes were described by ...

Between 1986 and 2000 Textron dividend changes were described by the following equation: DIVt " DIVt"1 ! .36(.26 EPSt " DIVt"1) What do you think were (a) Textron’s target payout r

Capital budgeting, A project has a one-year life. It has an outlay of Rupee...

A project has a one-year life. It has an outlay of Rupee 1,500 million. At the end of Year 1, the net inflow is likely to be Rupee 2,200 million. The pretax cost of debt is 11%, th

605, I am working on the comprehensive probelm and I can not figure out the...

I am working on the comprehensive probelm and I can not figure out the trial balance. Where am I going wrong?

Calculate term of leverage liquidity and fluidity, STATEMENTS OF FINANCIAL ...

STATEMENTS OF FINANCIAL POSITION: as at 31 December 2011 Group                                 Note         2011                         2010        RM'

Economic substance, economic substance as in recognition of revenue

economic substance as in recognition of revenue

Condition of joint return, Surviving Spouse - This is a person whose wife o...

Surviving Spouse - This is a person whose wife or husband died during tax year. A surviving spouse can file a JOINT RETURN for the year in which death occurred. Additionally a join

What is financial risk when company experiencing changes, Financial risk is...

Financial risk is the likelihood of a company experiencing changes in the level of its distributable earnings as a result of the need to make interest payments on debt finance or p

What kinds of business ownership exist, What kinds of business ownership ex...

What kinds of business ownership exist? Particular form of business ownership has significant implications for accounting purposes and so it's useful to be clear about the main

Write Your Message!

Captcha
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