Chapter 13: 13.4 CF0 = (110‚000) ; CF1-CF10 = 19‚000 ; WACC = 10% NPV = 6‚746.78 ; The company should replace the old machine for a new one. 13.6 Year 0 Net Cash Flow = Machine Price + Cost of Install + Increase in Net Working Capital Year 0 = $1‚080‚000 + $22‚500 + $15‚500 = ($1‚118‚000) Depreciation Year 1 = ($1‚080‚000 + $22‚500) x 0.3333 = $367‚463 Depreciation Year 2 = ($1‚080‚000 + $22‚500) x 0.4445 = $409‚061 Depreciation Year 3 = ($1‚080‚000 + $22‚500) x 0.1481 = $163‚ 280 Net
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------------------------------------------------- History of money The history of money spans thousands of years. Numismatics is the scientific study of money and its history in all its varied forms. Many items have been used as commodity money such as natural scarce precious metals‚ cowry shells‚ barley‚ beads etc.‚ as well as many other things that are thought of as having value. Modern money (and most ancient money) is essentially a token — in other words‚ an abstraction. Paper currency is
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Project Analysis Marko Hartmann‚ 2010-10-15 Indroduction Most companies prepare each year a list of investment projects planned for the next coming year: The annual capital budget. However‚ being in the list of investments proposals not mean automatic go ahead with this project. Managers have to ask themselves what makes a project tick‚ what are the main uncertainties and how can you recognize these at an early stage. Therefore‚ we learn to use different kinds of analysis –methods like sensitive
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FIN515 Homework 5 Problem 10-8: NPVs‚ IRRs‚ and MIRRs for Independent Projects Edelman Engineering is considering including two pieces of equipment‚ a truck and an overhead pulley system‚ in this year’s capital budget. The projects are independent. The cash outlay for the truck is $17‚100 and that for the pulley system is $22‚430. The firm’s cost of capital is 14%. After-tax cash flows‚ including depreciation‚ are as follows: Year | Truck | Pulley | 1 | $5‚100 | $7‚500 | 2 | 5‚100 |
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The Warehouse Facility Consolidation project is aim to improve the NH’s warehouse facilities and can save the company’s operating costs as well as increase the shipping speed. This project is in retail division with an NPV of 2.29‚ an IRR of 13.56%‚ and a payback period of 8.23 years and a payback index of 0.31. Also‚ this project was considered as a medium risk project with 9.25% discount rate. Expansion of Mail-order Catalog Business to Asia is a retail division project
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spirit to the example that we did in class) Blue Demon Bank expects that the Mexican peso will appreciate against the dollar from its spot rate of $.15 to $.17 in 10 days. The following interbank lending and borrowing rates exist: Lending Rate Borrowing Rate U.S. dollar 8.0% 8.3% Mexican peso 8.5% 8.7% Assume that Blue Demon Bank has a borrowing capacity of either $10 million or 70 million peso in the interbank market‚ depending on which currency it wants to borrow. How could Blue
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1. Calculate the Payback Period of each project. Explain what argument Tim should make to show that the Payback Period is not appropriate in this case. Answer : Year Synthetic Resin Epoxy Resin Cash Flows Cumulative Cash Flows Cash Flows Cumulative Cash Flows 0 -$1‚000‚000 -$1‚000‚000 -$800‚000 -$800‚000 1 $350‚000 -$650‚000 $600‚000 -$200‚000 2 $400‚000 -$250‚000 $400‚000 $200‚000 3 $500‚000 $250‚000 $300‚000 $500‚000 4 $650‚000 $900‚000 $200‚000 $700‚000 5 $700‚000 $1‚600‚000 $200‚000
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Memorandum To: CEO‚ Ocean Carriers Re: Ocean Carriers Capital Budgeting Mary Linn‚ Vice President of Finance‚ has been approached by a potential customer with a proposed lease of a ship for a three-year period‚ beginning in early 2003. The terms are very attractive but we currently do not have a ship that meets this customer’s needs. Ms. Linn has asked Group 4 to research three proposed scenarios to determine whether or not commissioning a new capesize carrier for this customer will
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In a kingdom fathoms below the ocean’s surface‚ we meet Ariel‚ the little mermaid who longs to be part of the world on dry land. Joining her are Sebastian‚ Ariel’s sidekick; Ursula‚ the evil sea witch; Triton‚ King of the Sea and the handsome human Prince Eric. Based on the Disney animated film and hit Broadway musical‚ Dallas Summer Musicals production of Disney’s The Little Mermaid seen at Fair Park‚ was astounding. It not only captured the Animated movie to its entirety but gave off that little
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PHUKET BEACH HOTEL: VALUING MUTUALLY EXCLUSIVE PROJECTS I. STATEMENT OF THE PROBLEM This is an assessment of the different costs and benefits of two mutually exclusive capital projects involving the use of an underutilized space located on the second floor of the main building of Phuket Beach Hotel (PBH). The first project‚ Planet Karaoke Pub (PKP) offered to sign a four-year lease agreement with (PBH) while the second project‚ Beach Karaoke Pub (BKP)‚ is a pub the PBH itself‚ plans to put
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