Preview

Why Should Harris Invest Into The Shrimp Processing Plant

Satisfactory Essays
Open Document
Open Document
399 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Why Should Harris Invest Into The Shrimp Processing Plant
Harris Case Analysis
Objective: Should Harris invest into the shrimp processing plant?
Issues:
1. Will this processing plant have a value today that is greater than or equal to the cost today?
-If the NPV of the plant is greater than zero, then we should move forward with the investment.
NPV Analysis:
Value> Cost
Value: PV: Value right now
PV= forecast of future cash returns (FCR)
-We used FCR to determine how much cash we get back and can deem the plan a good investment if we can bring in more than we would we spend. (Sales>Expenses)
Revenues-Increase in A/R each year= Cash revenues
Expenditures (increase in other assets)-Increase in payables=Cash expenditures
Revenues
-Increase in asset accounts
+Increase in payables …show more content…
A/R | 0 | 2416 | 3446 | 1857 | 991 | 1124 | 1267 | Inc. A/P | 0 | 2610 | 3724 | 2006 | 1070 | 1215 | 1369 | Inc. Inventory | 2485 | 2578 | 4747 | 3108 | 1657 | 1892 | 2120 | Inc. Other Assets | 100 | 915 | 1449 | 779 | 416 | 473 | 532 | FCF | -2585 | -2654.76 | -2978.72 | 721.88 | 2985.32 | 3303.24 | 3707.28 | | | | | | | | | PV of FCF at 10% | -2350.00 | -2194.02 | -2237.96 | 493.05 | 1853.65 | 1864.59 | 1902.42 | PV of FCF at 20% | -2154.17 | -1843.58 | -1723.80 | 348.13 | 1199.73 | 1106.25 | 1034.63
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Powerful Essays

    Concordia Real Estate Inc Case Study: Analysis of the Investment Opportunity
    • 3248 Words
    • 13 Pages

    Concordia Real Estate Inc Case Study: Analysis of the Investment Opportunity

    The resulting NPV indicates that the project should be accepted and the investor should expect a return on equity of 38.87%. The NPV provides the investor with an expectation of what all future cash inflows will be worth in today’s dollars. The profitability index is closely related to the NPV. It evaluates the project’s feasibility based on future cash flows compared to initial costs. In general, a project is deemed a valid investment if this ratio is over 1. For this investment opportunity the profitability index indicates that it should be accepted.…

    • 3248 Words
    • 13 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    BGA1 Task 4
    • 343 Words
    • 2 Pages

    BGA1 Task 4

    Net present value (NPV) method is used to decide whether or not a company should take on a new project or acquisition. The formula for NPV is the difference between the present value of a project’s cash inflows and its cash outflows. To calculate the present values the future cash flows are discounted using the time value of money method. For the project to be accepted the NPV should be positive, because it means the return is greater than the required rate of return; or zero, because that means the return is equal to the required rate of return. However, if negative the project should be rejected, because its return is less than the required rate of return. This required rate of return is also referred to as the cost of capital.…

    • 343 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Eco 372 Week 2 Research Paper
    • 687 Words
    • 3 Pages

    Eco 372 Week 2 Research Paper

    c. What would be the firm’s profit or loss at the following units of production sold: 12,000 units? 15,000 units? 20,000 units?…

    • 687 Words
    • 3 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    FIN 486 Week 4 Individual Assignment Capital Budgeting
    • 588 Words
    • 6 Pages

    FIN 486 Week 4 Individual Assignment Capital Budgeting

    As shown in the present value table, the NPV of the capital project is $3,680,709 on the negative side which means the project will result in the decrease in the wealth of the company’s stockholders, resulting in violation of the wealth maximization concept.…

    • 588 Words
    • 6 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Washburn Case
    • 447 Words
    • 2 Pages

    Washburn Case

    (d) if Washburn achieves the sales target of 2,000 units at the $349 retail price, what will its profit be?…

    • 447 Words
    • 2 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Please Post a 150-300 Word Response to the Following Discussion Question by Clicking on Reply. Solve Problem P15-7 on Page 741 of Your Reading Material. the Name of This Company Is Cotte Corporation. You Are Required to
    • 464 Words
    • 2 Pages

    Please Post a 150-300 Word Response to the Following Discussion Question by Clicking on Reply. Solve Problem P15-7 on Page 741 of Your Reading Material. the Name of This Company Is Cotte Corporation. You Are Required to

    COTTE CORPORATION | | Income Statement | | For the Year Ended December 31, 2009 | | | | | Sales | $11,000,000 | | Cost of goods sold | $5,184,000 | |…

    • 464 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Harris Seafood Case
    • 1471 Words
    • 6 Pages

    Harris Seafood Case

    Question Number One (1) Value the processing plant proposal. Ignore the Industrial Revenue Bond financing. Assume: Market Risk Premium 8.8%, Riskless Rate 11.41%, and Harris Long Term Debt Rate 13.5%.…

    • 1471 Words
    • 6 Pages
    Good Essays
    Read More
  • Good Essays

    Nucor Memo
    • 905 Words
    • 4 Pages

    Nucor Memo

    Top management at Nucor Corporation has determined its own internal investment criterion in determining whether to accept or reject a new investment project. Currently, the company judges the potential success of a project by its ability to achieve a 25 percent return on assets after 5 years. This ratio measures how efficiently Nucor’s assets are able to generate revenue. Based off current market growth rate predictions, an investment in the CSP process will result in a return on assets of 29.33 percent. (Exhibit 1) This number exceeds the initial investment qualification by a promising margin of about 4 percent. Therefore, based on the internal criterion, this CSP process is a relatively safe and profitable investment.…

    • 905 Words
    • 4 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Cango Week 3
    • 693 Words
    • 3 Pages

    Cango Week 3

    1. At the beginning of 2009, CanGo purchased the online gaming company. This purchase was for cash, paid for through the proceeds of the IPO and results in goodwill.…

    • 693 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Paccar Build vs Buy
    • 655 Words
    • 3 Pages

    Paccar Build vs Buy

    NPV (Net Present Value) measures the expected change in wealth from undertaking the project. The NPV of purchasing is $60.34 million and $93.23 million for developing the technologies. NPV is the most effective measurement since both IRR and MIRR have the project scale issues. In this case, developing the technologies gives a greater NPV and is the best choice.…

    • 655 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Mendel Paper Company
    • 1378 Words
    • 5 Pages

    Mendel Paper Company

    Mendel Paper Company has been doing relatively well with the sales of computer paper, napkins, place mats, and poster board. With more people eating out, the demand for napkins and place mats have increased. Computer paper and poster boards have slowly increased in demand as well. However, there is concern at the company with the fixed cost of operations. Marlene Herbert, the plant superintendent, said, “As we have automated our operation, we have experienced increases in fixed overhead and even variable overhead. And, we will have to add more equipment since it appears that we need even more plant capacity. We are operating over our normal capacity as it is.” (Case 2B). With the new production costs added in, will the Mendel Paper Company have what it takes to succeed?…

    • 1378 Words
    • 5 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Acc/291 Week 4 Individual
    • 439 Words
    • 2 Pages

    Acc/291 Week 4 Individual

    E11-15 | | | | |After | |After | | | | | |Stock | |Stock | | | |Before | |Dividend | |Split | | | | | | | | | |Shareholder equity | | | | | | | |Paid-in capital | | | | | | | |Common stock | | 600,000 | | 630,000 | | 600,000 | |In excess of par value | |0 | |12,000 | |0 | |Total paid-in capital | |600,000 | | 642,000 | | 600,000 | |Retained earnings | |900,000 | |858,000 | |900,000 | |Total shareholders’ | | | | | | | | equity | |1,500,000 | |1,500,000 | |1,500,000 | | | | | | | | |…

    • 439 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Harris Seafood Assignment 2
    • 961 Words
    • 4 Pages

    Harris Seafood Assignment 2

    Despite the economic conditions, analyzing the Income statement and Balance sheet with an inflation of 11%; I think that the purchase of a new plant is a good long term investment which will start generating profits year after year while the country's economy is recovering. We will begin to see how economic and sales growth will gradually increase, which will allow us to recover the investment and make a profit, this is the reason why I would approve this project , in conclusion I think that the NPV will be positive.…

    • 961 Words
    • 4 Pages
    Satisfactory Essays
    Read More
  • Better Essays

    Road King Trucks Case Analysis
    • 1113 Words
    • 5 Pages

    Road King Trucks Case Analysis

    We expect inflows are greater than outflows, so to cover the cost occurred in the progress. But to determine whether we should run the project or not, we need to calculate the NPV. I will discuss it later.…

    • 1113 Words
    • 5 Pages
    Better Essays
    Read More

Related Topics