Question
9)
Telstar Communications is going to purchase an asset for $720,000 that will produce $350,000 per year for the next four years in earnings before depreciation and taxes. The asset will be depreciated using the three-year MACRS depreciation schedule in Table 12–12. (This represents four years of depreciation based on the half-year convention.) The firm is in a 35 percent tax bracket.
Fill in the schedule below for the next four years. (Input all amounts as positive values. Round your answers to the nearest whole dollar amount.)
Year 1 Year 2 Year 3 Year 4 Earnings before depreciation and taxes$ $ $ $ Depreciation Earnings before taxes$ $ $ $ Taxes Earnings after taxes$ $ $ $ Depreciation Cash flow$ $ $ $
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"
Question
8)Keller Construction is considering two new investments. Project E calls for the purchase of earthmoving equipment. Project H represents an investment in a hydraulic lift. Keller wishes to use a net present value profile in comparing the projects. The investment and cash flow patterns are as follows: Use Appendix Bfor an approximate answer but calculate your final answer using the formula and financial calculator methods.
Project E Project H($19,000 investment) ($19,000 investment)YearCash Flow YearCash Flow1 $ 4,000 1 $ 15,000 2 5,000 2 4,000 3 6,000 3 3,000 4 13,000
a.Determine the net present value of the projects based on a zero percent discount rate.
Net Present Value Project E $ Project H $
b.Determine the net present value of the projects based on a discount rate of 10 percent. (Do not round intermediate calculations and round your answers to 2 decimal places.)
Net Present Value Project E $ Project H $
c.If the projects are not mutually exclusive, which project(s) would you accept if the discount rate is 10 percent? Project EProject HBoth H and E
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"
Question
7)
Turner Video will invest $94,500 in a project. The firm’s cost of capital is 10 percent. The investment will provide the following inflows. Use Appendix A for an approximate answer but calculate your final answer using the formula and financial calculator methods.
YearInflow1$ 33,000 235,000 332,000 438,000 545,000
The internal rate of return is 25 percent.
a.If the reinvestment assumption of the net present value method is used, what will be the total value of the inflows after five years? (Assume the inflows come at the end of each year.) (Do not round intermediate calculations and round your answer to 2 decimal places.) Total value of inflows$ b.If the reinvestment assumption of the internal rate of return method is used, what will be the total value of the inflows after five years? (Use the given internal rate of return. Do not round intermediate calculations and round your answer to 2 decimal places.) Total value of inflows$ c.Which investment assumption is better? Reinvestment assumption of IRRReinvestment assumption of NPVrev: 03_29_2016_QC_CS-43977
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"
Question
6)The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $57,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. YearCash Flow1$ 21,000 224,000 328,000 414,000 59,000
a.If the cost of capital is 11 percent, what is the net present value of selecting a new machine? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Net present value$
b.What is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Internal rate of return %
c.Should the project be accepted? YesNo
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"
