Question: I need help with this question Sentax Natural Snacks is contemplating an expansion. The finance manager is looking at buying a second machine that would

I need help with this question

I need help with this question Sentax NaturalI need help with this question Sentax NaturalI need help with this question Sentax NaturalI need help with this question Sentax NaturalI need help with this question Sentax Natural
Sentax Natural Snacks is contemplating an expansion. The finance manager is looking at buying a second machine that would cost $80,000 and last for 10 years, with no disposal value at the end of that time. Sentax expects the increase in cash revenues from the expansion $28.500 per year, with additional annual cash costs of $16,000. Sentax's cost of capital is 8%, and the company pays no taxes because of its location in a special economic zone. Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements X Requirements fearest whole dollar. Use factors to three decimal places, XXXX, and enter the net present value of the investment rounded to the nearest whole dollar. Use a minus sign or 1. Calculate the net present value and internal rate of return for this investment. 2. Assume the finance manager of Sentax is unsure about the cash revenues and costs. The revenues could be anywhere from 10% higher to 10% lower than predicted. Assume cash costs are still $16,000 per year. What are NPV ry. In calculations, use factors to three decimal places, XXXX. Do not round intermediary calculations. Round the internal rate of return to the nearest hundredth percent, and IRR at the high and low points for revenue? 3. The finance manager thinks that costs will vary with revenues, and if the revenues are 10% higher, the costs will be 7% higher. If the revenues are 10% lower, the costs will be 10% lower. Recalculate the NPV and IRR at the high and low revenue points with this new cost information. The revenues could be anywhere from 10% higher to 10% lower than predicted Assume cash costs are still $16,000 per year. What are NPV and IRR at the high and low 4. The finance manager has decided that the company should eam 2% more than the cost of capital on any project. Recalculate the original NPV in mediary calculations to the nearest whole dollar. Use factors to three decimal places, XXX, and enter the net present value of the investment rounded to the nearest whole requirement 1 using the new discount rate and evaluate the investment opportunity. 5. Discuss how the changes in assumptions have affected the decision to expand. line interpolation as necessary. In calculations, use factors to three decimal places, X XXX. Do not round intermediary calculations. Round the internal rate of return to theRequirement 1. Calculate the net present value and internal rate of return for this investment. Begin by calculating the not present value of the Investment. (Round intermediary calculations to the nearest whole dollar. Use factors to three decimal places, XXXX, and enter the net present value of the investment rounded to the nearest whole dollar. Use a minus sign or parentheses for a negative not present value.} The net present value is Now calculate the internal rate of return for this investment. (Use straight-line interpolation as necessary. In calculations, use factors to three decimal places, X XXXX. Do not round intermediary calculations. Round the internal rate of return to the nearest hundredth percent, XXX%%.) The internal rate of return (IRR) isRequirement 2. Assume the finance manager of Sentax is unsure about the cash revenues and costs. The revenues could be anywhere from 10% higher to 10% lower than predicted Assume cash costs are still $16,000 per year. What are NPV and IRR at the high and low points for revenue? Begin by calculating the not present value of the investment at the high point for revenue. (Round intermediary calculations to the nearest whole dollar. Use factors to three decimal places, XXXX, and enter the net present value of the investment rounded to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.) The net present value (NPV) at the high point for revenue is Now calculate the internal rate of return for the investment at the high point for revenue. (Use straight-line interpolation as necessary. In calculations, use factors to three decimal places, XXXXX. Do not round intermediary calculations. Round the internal rate of return to the nearest hundredth percent, XXX%) The internal rate of retum (IRR) at the high point for revenue is Now calculate the net present value of the investment at the low point for revenue. (Round intermediary calculations to the nearest whole dollar. Use factors to three decimal places, X XXX, and enter the net present value of the investment rounded to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.) The net present value (NPV) at the low point for revenue is Calculate the internal rate of return for the investment at the low point for revenue. (Use straight-line interpolation as necessary. In calculations, use factors to three decimal places, X XXX. Do not round intermediary calculations. Round the internal rate of return to the nearest hundredth percent, XXX(56.) The internal rate of return (IRR) at the low point for revenue isRequirement 3. The finance manager thinks that costs will vary with revenues, and if the revenues are 10% higher, the costs will be 7% higher, If the revenues are 10% lower, the costs will be 10% lower, Recalculate the NPV and IRR at the high and low revenue points with this new cost information. Begin by calculating the net present value of the investment at the high point for revenue. (Round intermediary calculations to the nearest whole dollar. Use factors to three decimal places, XXXX, and enter the net present value of the investment rounded to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.) The net present value (NPV) at the high point for revenue is Now calculate the Internal rate of return for the Investment at the high point for revenue. (Use straight-line Interpolation as necessary. In calculations, use factors to three decimal places, X XXX. Do not round intermediary calculations. Round the Internal rate of return to the nearest hundredth percent, XXX9%) The internal rate of return (IRR) at the high point for revenue is 1%. Now calculate the net present value of the investment at the low point for revenue. (Round intermediary calculations to the nearest whole dollar. Use factors to three decimal places, XXXX, and enter the net present value of the investment rounded to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.) The not present value (NPV) at the low point for revenue is Calculate the internal rate of return for the investment at the low point for revenue. (Use straight-line interpolation as necessary. In calculations, use factors to three decimal places, XXXX. Do not round intermediary calculations. Round the internal rate of return to the nearest hundredth percent, XXX.) The Internal rate of return (IRR) at the low point for revenue isRequirement 4. The finance manager has decided that the company should earn 2% more than the cost of capital on any project. Recalculate the original NPV in requirement 1 using the new discount rate and evaluate the investment opportunity. (Round intermediary calculations to the nearest whole dollar. Use factors to three decimal places, XXXX, and enter the net present value of the investment rounded to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.) The net present value is Requirement 5. Discuss how the changes in assumptions have affected the decision to expand. As can be observed from the answers to requirements 1. through 4. above, the different assumptions lead to recommendations for the decision to expand

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