JavaCity is considering new brewing equipment. The amount of initial investment will be $250 today and...

Transcribed Image Text:

JavaCity is considering new brewing equipment. The amount of initial investment will be $250 today and the equipment is expected to last for 10 years with no salvage value. The depreciable base is the entire amount of investment, and straight line depreciation will be used. Project inflows are expected to be $560 per year and project outflows are expected to be $350 per year, both starting in one year and continuing at the end of each year over the project life. JavaCity pays tax at the rate of 30%. What is the net present value of the project if the required rate of return is 6%. Project NPV $ Place your answer in dollars and cents. Work your analysis using at least 4 decimal places of accuracy. Notes on formatting: Do NOT include a dollar sign or a comma in your NPV. For example, an answer of one hundred twenty dollars and fifteen cents would be placed as 120.15. If applicable, indicate negative amounts with a minus sign in front of the number. Second Best Insurance company is advertising a new product to retirees looking to invest their 401(K) retirement accumulations. The idea is this: give us, Second Best, the lump sum of $750 today and we'll then give you, the retiree, an annuity of $200 to be received at the end of each year, beginning one year from today, for 7 consecutive years. From the standpoint of the retiree, calculate the NPV of this product if the required rate of return is 11%. $ Place your answer in dollars and cents. Indicate any negative amounts (if applicable) with a minus sign in front of the number. Do not include a dollar sign in your answer. Work all calculations using at least 4 decimal places of accuracy. Exxon Oil Corp. is negotiating the purchase of 1 million barrels of oil from a bankrupt competitor to be delivered and paid for in exactly 1 year. The oil exporter wants the contract expressed in Mexican Pesos, and the current "in USD" Peso exchange rate is $0.075. The contract is signed at a price of 1405 Pesos per barrel. Exxon can enter a futures contract that allows the company to purchase Pesos at the exact time of oil delivery at $0.076. If we consider the use of the futures contract to hedge Exxon's foreign exchange risk, how much is the cost of this insurance, in U.S. dollars, to Exxon? Round your answer to the closest $USD. Do not include a dollar sign or a comma in your answer. For example, an answer of one million four hundred and ten thousand would be entered as 1410000. JavaCity is considering new brewing equipment. The amount of initial investment will be $250 today and the equipment is expected to last for 10 years with no salvage value. The depreciable base is the entire amount of investment, and straight line depreciation will be used. Project inflows are expected to be $560 per year and project outflows are expected to be $350 per year, both starting in one year and continuing at the end of each year over the project life. JavaCity pays tax at the rate of 30%. What is the net present value of the project if the required rate of return is 6%. Project NPV $ Place your answer in dollars and cents. Work your analysis using at least 4 decimal places of accuracy. Notes on formatting: Do NOT include a dollar sign or a comma in your NPV. For example, an answer of one hundred twenty dollars and fifteen cents would be placed as 120.15. If applicable, indicate negative amounts with a minus sign in front of the number. Second Best Insurance company is advertising a new product to retirees looking to invest their 401(K) retirement accumulations. The idea is this: give us, Second Best, the lump sum of $750 today and we'll then give you, the retiree, an annuity of $200 to be received at the end of each year, beginning one year from today, for 7 consecutive years. From the standpoint of the retiree, calculate the NPV of this product if the required rate of return is 11%. $ Place your answer in dollars and cents. Indicate any negative amounts (if applicable) with a minus sign in front of the number. Do not include a dollar sign in your answer. Work all calculations using at least 4 decimal places of accuracy. Exxon Oil Corp. is negotiating the purchase of 1 million barrels of oil from a bankrupt competitor to be delivered and paid for in exactly 1 year. The oil exporter wants the contract expressed in Mexican Pesos, and the current "in USD" Peso exchange rate is $0.075. The contract is signed at a price of 1405 Pesos per barrel. Exxon can enter a futures contract that allows the company to purchase Pesos at the exact time of oil delivery at $0.076. If we consider the use of the futures contract to hedge Exxon's foreign exchange risk, how much is the cost of this insurance, in U.S. dollars, to Exxon? Round your answer to the closest $USD. Do not include a dollar sign or a comma in your answer. For example, an answer of one million four hundred and ten thousand would be entered as 1410000.