Problem Set, Other Engineering

Assignment Help:

1) An investment project requires a net investment of $100,000. The project is expected to generate annual net cash flows of $28,000 for the next 5 years. The firm''''''''s cost of capital is 12%. Part 1 - Determine the payback period for the project. Part 2 – Determine the payback period accounting for the present value of future cash flow (ie. Present value calculations). Should the project be done? After considering present value is the 100,000 investment recovered in 3-4 years, 4-5 years or over 5 years?





2) What is the IRR for a project that has a net investment of $14,600 and a single net cash flow of $25,750 in 5 years?





3) Red Lake Mines, Inc. is considering adoption of a new project requiring a net investment of $10 million. The project is expected to generate 5 years of net cash inflows of $5 million per year. In the project''''''''s sixth, and final, year it is expected to have a net cash outflow of $1 million. What is the project NPV, using a discount rate of 12%?




4) Zimmer, a manufacturer of modular rooms, plans to expand its operations in Landshut, Germany. The expansion will cost $14.5 million and is expected to generate annual net cash flows of €2.15 million for a period of 12 years and then the operation will be sold for €1 million (net of taxes). The cost of capital for the project is 14%. Using a spot exchange rate of $1.25/€ as the forecast FX rate for the euro for the term of the project, compute the NPV of this expansion project.






5) Dupree Funds is considering the fees charged by two banks. First America charges a flat rate of $0.11 per payment and First Western requires a deposit of $500,000 (that does not pay interest to Dupree), plus $.05 per payment. What is the number of payments per year where the costs of the two banks will be equal? Assume Dupree''''''''s cost of funds is 9%.









6) What is the annual tax shield to a firm that has total assets of $80 million and a net worth of $55 million, if the average interest rate on debt is 8.5% and the marginal tax rate is 35%?







7) Jason is interested in finding the breakeven point for a new pump it plans to produce. The price of the pump is $250 and the variable cost ratio is 50% of the price. Jason calculated that the fixed costs will be about $400,000. What is the breakeven point of operations?













8) Crown Honda purchased one of its most popular motorcycle models for 965,000 yen. The FX rate for the yen was 142 yen per dollar at the time of purchase, but then rose to 171.8 yen by the time payment was made. What was the dealer’s gain or loss on the change in rates?









9) Seduak has estimated the costs of debt and equity capital for various proportions of debt in its capital structure.

% Debt After-tax cost of debt Cost of equity
0% - 13.0%
10 5.4% 13.3
20 5.4 13.8
30 5.8 14.4
40 6.3 15.2
50 7.0 16.0
60 8.2 17.0

Based on these estimates, determine Seduak’s optimal capital structure

Related Discussions:- Problem Set

Digital signal processing, compute IDFT using DIT and DFT X(K)={20,-5.828-j...

compute IDFT using DIT and DFT X(K)={20,-5.828-j2.414,0,-0.172-j0.412,0,-0.172+j0.414,0,-5.828+j2.414}

Aircraft internal and external markings, AIRCRAFT INTERNAL AND EXTERNAL MAR...

AIRCRAFT INTERNAL AND EXTERNAL MARKINGS SMOKING IN AIRCRAFT - Reference: ANO Article 66 and JAR-25.791 Every aircraft registered in the U.K. must have a notice indicati

Solid state devices, Derive an expression for electron concentration in con...

Derive an expression for electron concentration in conduction band and hole concentration in valance band

Turbine cooling - aircraft engine, Turbine cooling  Airflow: Figure ill...

Turbine cooling  Airflow: Figure illustrates the turbine cooling airflow of a typical gas turbine engine. The outward flow of cooling air is controlled by air seals of multi-g

AERONAUTIC PROJECT, hello sir, i am a FINAL YEAR B.E STUDENT...NOW i am in ...

hello sir, i am a FINAL YEAR B.E STUDENT...NOW i am in the stage of doing a PROJECT...please give me some ideas in the field of AERODYNAMICS for doing PROJECT..

Fire precautions - fire protection engineering, Fire precautions - fire pro...

Fire precautions - fire protection engineering: Fire precautions include: Protecting escape routes in fire resisting construction, Providing fire doors between

Masonry dams with trapezoidal cross section, How to calculate the depth of ...

How to calculate the depth of a masonry dam of trapezoidal cross section with height of 24ft,2ft top width,,12 ft base width and weight of concrete 150 lb/ft^3.The resultant pressu

Product applications of powder metallurgy, Q. Describe two major product ap...

Q. Describe two major product applications of powder metallurgy. Ans. Following are some typical applications of powder metallurgy.         (i) Refractory metal : P

Interview Technique, Explain interview technique in software engineering in...

Explain interview technique in software engineering in brief?

Aircraft maintance, Explain different types of intakes of aircraft

Explain different types of intakes of aircraft

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