Question 9 5.6 pts As a financial analyst, you must evaluate a proposed project to produce...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 9 5.6 pts As a financial analyst, you must evaluate a proposed project to produce printer cartridges. The purchase price of the equipment, including installation, is $65,000, and the equipment will be fully depreciated at t = 0. Annual sales would be 4,000 units at a price of $50 per cartridge, and the project's life would be 3 years. Current assets would increase by $5,000 and payables by $3,000. At the end of 3 years, the equipment could be sold for $10,000. Variable costs would be 70% of sales revenues, fixed costs would be $30,000 per year, the marginal tax rate is 25%, and the corporate WACC is 11%. The firm's project CVs generally range from 1.0 to 1.5. A 3% risk premium is added to the WACC if the initial CV exceeds 1.5, and the WACC is reduced by 0.5% if the CV is 0.75 or less. Then a revised NPV is calculated. What are the revised values for the NPV? NPV Best Case Scenario = $ NPV Base Case Scenario = $ NPV Worst-case Scenario = -$ Expected NPV = $ Question 9 5.6 pts As a financial analyst, you must evaluate a proposed project to produce printer cartridges. The purchase price of the equipment, including installation, is $65,000, and the equipment will be fully depreciated at t = 0. Annual sales would be 4,000 units at a price of $50 per cartridge, and the project's life would be 3 years. Current assets would increase by $5,000 and payables by $3,000. At the end of 3 years, the equipment could be sold for $10,000. Variable costs would be 70% of sales revenues, fixed costs would be $30,000 per year, the marginal tax rate is 25%, and the corporate WACC is 11%. The firm's project CVs generally range from 1.0 to 1.5. A 3% risk premium is added to the WACC if the initial CV exceeds 1.5, and the WACC is reduced by 0.5% if the CV is 0.75 or less. Then a revised NPV is calculated. What are the revised values for the NPV? NPV Best Case Scenario = $ NPV Base Case Scenario = $ NPV Worst-case Scenario = -$ Expected NPV = $
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
Develop a media plan that supports the planned marketing campaign. Include: a media budget, recommendations and rationale for the selected and integrated multi-media activities within the set budget...
-
1. Using the framework in Figure 10.3, how would you categorize information technology, temporary personnel, and advertising as spend categories for the bank? Why? 2. What recommendations do you have...
-
The number of daily newspapers in the United States is now 1486, and it was 2226 in 1990. Relative Change. Exercises each provide two values. For each pair of values, use a percentage to express...
-
Information from Razure Adventures Companys financial statements for the current year are provided in the Working Papers. Work independently to complete the following problem. 1. Calculate the...
-
The Pearlsburg (West Virginia) Rescue Squad serves a mountainous, rural area in southern West Virginia. The only access to the homes, farms, and small crossroad communities and villages is a network...
-
The organizer of a conference is selecting workshops to include. She will select from 7 workshops about genetics and 5 workshops about ethics. In how many ways can she select 6 workshops if 4 or more...
-
A golfer recorded the score for each round of golf she played in a season. The box-and-whisker plot (sometimes called a boxplot) summarizes these scores. 60 65 70 75 80 85 90 95 100 105 110 49 Score...
-
Generally speaking, how does the Auburn creed support use of the balanced score card in performance measurement?In other words, why is it important to combine both financial and non-financial...
-
3. Futuristic was a newly setup firm in 2019. It is in the business of providing artwork. However, being in the business of standard art objects (non-essential items), it did not do well once it was...
-
the runs scored by a batsman in 5 ODIs are 31,97,112,63 and 12.the standard deviation is.
-
Some Operator costs should not be shared with non-operating partners. Provide examples of the main types of 100% Operator costs and critically discuss why they should not be shared with Joint Venture...
-
Assume you work for a big bank and you determine that credit card debt among customers with outstanding balances on their accounts. has a normal distribution. The mean of this distribution is $20,000...
-
Brainstorm business ideas with your group and answer the following questions: 1. Think of products or services that you can provide to the hospitality sector 2. Why do you think this is a good idea?...
-
3.16. For a system with non-identical service rates (see Sect. 3.5) and a limit of N jobs in the system (Eq. 3.13), obtain an expression for the mean service time per job, E[Ts], as a function of the...
-
Hospitality Inc. (HI) is a holding company that has wholly owned interests in the travel and entertainment industry. HI is listed on the Toronto Stock Exchange and is subject to the reporting...
-
Create a similar barplot as in Figure 1. 5, but now plot the corresponding proportions of males and females in each of the three situation categories. That is, the heights of the bars should sum up...
-
Import the data set EuStockMarkets from the same website as the iris data set above. The data set contains the daily closing prices of four European stock indices during the 1990s, for 260 working...
Study smarter with the SolutionInn App