Maju Construction (MCo) Sdn. Bhd. is bidding on a contract to build four tiny camping house...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Maju Construction (MCo) Sdn. Bhd. is bidding on a contract to build four tiny camping house (TCH) a year for the next three years for Sintokian campsite. Each TCH will be sold at the price of P. The project requires the purchase of RM132,000 of equipment which will be depreciated using simplified straight-line depreciation to a zero book value over the three years. The equipment can be sold at the end of the project for RM80,000. MCo will also need RM32,000 in net working capital over the life of the project. The fixed costs will be RM36,000 a year and the variable costs will be RM176,000 per TCH. MCo required rate of return is 14% for this project and the tax rate is 24%. Based on the information given: Calculate the initial outlay of the project. i) Calculate the annual cash flows of the project. ii) Calculate the annual cash flows of the project. iii) Calculate the terminal cash flows of the project. (1 mark) (1 mark) (2 marks) iv) What is the minimum amount that MCo should bid per TCH if the company required NPV of RM20,000 on this project? (2.5 marks) Maju Construction (MCo) Sdn. Bhd. is bidding on a contract to build four tiny camping house (TCH) a year for the next three years for Sintokian campsite. Each TCH will be sold at the price of P. The project requires the purchase of RM132,000 of equipment which will be depreciated using simplified straight-line depreciation to a zero book value over the three years. The equipment can be sold at the end of the project for RM80,000. MCo will also need RM32,000 in net working capital over the life of the project. The fixed costs will be RM36,000 a year and the variable costs will be RM176,000 per TCH. MCo required rate of return is 14% for this project and the tax rate is 24%. Based on the information given: Calculate the initial outlay of the project. i) Calculate the annual cash flows of the project. ii) Calculate the annual cash flows of the project. iii) Calculate the terminal cash flows of the project. (1 mark) (1 mark) (2 marks) iv) What is the minimum amount that MCo should bid per TCH if the company required NPV of RM20,000 on this project? (2.5 marks)
Expert Answer:
Answer rating: 100% (QA)
a The initial outlay of the project capital expenditure change in working ... View the full answer
Related Book For
Construction accounting and financial management
ISBN: 978-0135017111
2nd Edition
Authors: Steven j. Peterson
Posted Date:
Students also viewed these finance questions
-
A construction company is bidding on a contract to build homes for a developer. The project consists of two types of homes and is scheduled to begin in September. The expected monthly housing starts,...
-
A construction company is bidding on a project and has asked you to conduct an EXCEL spreadsheet Monte Carlo simulation to determine an estimate of how long the work will take as part of its bid...
-
The Fender Construction Company receives a contract to build a building over a period of three years for a price of $700,000. Information relating to the performance of the contract is summarized as...
-
Because of excessive pollution on the Momiss River, the state of Momiss is going to build pollution control stations. Three sites (1, 2, and 3) are under consideration. Momiss is interested in...
-
Describe supply chain management (SCM) and its role in supporting business operations.
-
The conjectured bound (34.39) implies that at zero temperature \(\lambda_{L} ightarrow 0\). Does that imply that the scrambling time \(t_{*} ightarrow \infty\) ? Explain. Data From Equation 34.39:- 2...
-
A realtor uses a lock box to store the keys to a house that is for sale. The access code for the lock box consists of five digits. The first digit cannot be zero or nine and the last digit must be a...
-
Joshua Company has determined the following selling price and manufacturing cost per unit based on normal production of 72,000 units per year: Selling price per...
-
Our National Debt now stands at $32.3 Trillion dollars, the highest it has been in the history of our country. Why is this important for our nation and what can be done about it? Is health care a...
-
Toronto Cricket Property Inc. (TPI) has been incorporated with the purpose of build and operate a world-class cricket stadium outside Toronto. The land on which the stadium will be build is currently...
-
Completely Nuts, a major brand of peanut butter, has recently expanded its distribution to include 3,050,000 households within the Southwestern United States. Last quarter the region's total dollar...
-
creative, innovative, or particularly effective facility management practice. Describe your example - what is the purpose? What makes it creative, innovative, or particularly effective? What would it...
-
Many factors can affect pricing. Those factors can't be controlled or accurately predicted. The approaches used to value stocks (determine what the stock is truly worth) are usually theoretical. You...
-
in triangle ABC, triangle ACD and triangle AED are right angled triangles AB=3cm,BC=4cm,CD=12cm and EAD =20\deg . calculate the length of ED 2 answers
-
Greatmonth Tire Company has tested its new Roadslogger all-weather tire, and found that it has an average life of 64,000 miles with a standard deviation of 4,000 miles. a) If Greatmonth Tire has a...
-
Describe what you believe to be the points of intersection for Diversity, Cultural Awareness, and Globalization and their impact on the workplace. Explain why you chose these points of intersection.
-
Product Pricing using the Cost-Plus Approach Methods; Differential Analysis for Accepting Additional Business Digital Displays Inc. recently began production of a new product, flat panel displays,...
-
Distinguish among total-moisture content, free-moisture content, equilibrium-moisture content, unbound moisture, and bound moisture.
-
What uniform series of cash flows is equivalent to a $100,000 cash flow, ten years from now, if the uniform cash flows occur at the end of the year for the next ten years and the periodic interest...
-
Determine the collection periodwith and without retentionand receivable turns for the construction company in Figures 6-3 and 6-4. What insight does this give you into the companys financial...
-
Determine the monthly cash flows and total cash generated at the end of each month and just before the payment is received for the construction of a house with the following budget and schedule. On...
-
Amanda Company started business at the beginning of 2022. The company applies the lower-of-cost- or-net-realizable-value rule to its inventory as a whole. Inventory cost and market value as of the...
-
Which one of the following costs is not included in inventory for manufacturing firms? a. Raw materials used in production b. Raw materials unused and stored in the warehouse c. Salary paid to the...
-
Stevenson Company's trial balance as of December 31, 2022 shows \($35,000\) for inventory; but the balance sheet shows \($33,000.\) Assuming no inventory shrinkage, what is the most likely reason for...
Study smarter with the SolutionInn App