Research Paper
Running head: FINAL PROJECT 1
FINAL PROJECT
LENAYE CHAMBERS
BUS.401: PRINCIPLES OF FINANCE
INSTRUCTOR; GRANT MAGNUSON
APRIL 28,2013
FINAL PROJECT 2
FINAL PROJECT
To: Mr. V. Morrison,CEO,Caledonia Products From: The Assistant Financial Analyst Re: Cash Flow Analysis and Capital Rationing
Considering the introduction of a new product, you are currently in the 34 percent marginal tax bracket with a 15 percent required rate of return or cost of capital. This project is expected to last 5 years and then, because this is somewhat a fad product, this will be terminated. The following information describes the new project: Cost of new plant and equipment: $ 7,900,000 Shipping and Installation Costs: $ 100,000 Units Sales:
Year Units Sold 1 70,000 2 120,000 3 140,000 4 80,000 5 60,000
Sales price per unit: $300/unit in year 1 through 4,$260 in year 5 Variable cost per unit :
FINAL PROJECT
LENAYE CHAMBERS
BUS.401: PRINCIPLES OF FINANCE
INSTRUCTOR; GRANT MAGNUSON
APRIL 28,2013
FINAL PROJECT 2
FINAL PROJECT
To: Mr. V. Morrison,CEO,Caledonia Products From: The Assistant Financial Analyst Re: Cash Flow Analysis and Capital Rationing
Considering the introduction of a new product, you are currently in the 34 percent marginal tax bracket with a 15 percent required rate of return or cost of capital. This project is expected to last 5 years and then, because this is somewhat a fad product, this will be terminated. The following information describes the new project: Cost of new plant and equipment: $ 7,900,000 Shipping and Installation Costs: $ 100,000 Units Sales:
Year Units Sold 1 70,000 2 120,000 3 140,000 4 80,000 5 60,000
Sales price per unit: $300/unit in year 1 through 4,$260 in year 5 Variable cost per unit :
References: CAPM - RISK ( n.d.) Retrieved from http://www.uwf.edu/constad/fin4424web/ Keown, A., Martin, J., & Petty, J. (2011). Foundations of finance (7th ed.). Boston, MA: Prentice Hall. Net Present Value( n.d.) Retrieved from http://www.2012books.lard bucket.org/books/managerial- finance/section_13_03.html. ----------------------- [pic] [pic]