Today January 1, 2022, you have been named CFO of iSoftCloud, Inc., a startup in the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Today January 1, 2022, you have been named CFO of iSoftCloud, Inc., a startup in the cloud software industry. The previous CFO already committed to two projects down the road: • Project A is about to start on January 1, 2028 (that is six years from today) and lasts for 6 years (it is closed down on December 31, 2033). On each January 1 of the calendar years of 2028 to 2033, Project A needs an infusion of capital (investment) of $1.0 million. The cost of capital (discount rate) for Project A is 10.0% . Project B is about to start in a few minutes from your celebration of being named the CFO, in other words it has to start on January 1, 2022 (that is today) and lasts for 6 years (it is closed down on December 31, 2027). On each January 1 of the calendar years of 2022 (that is starting today) to 2027, Project B needs an infusion of capital (investment) of $1.0 million. The cost of capital (discount rate) for Project B is 15.0% a. What is the present value as of today, January 1, 2022, of the total funds you'll need to invest for the two projects? b. If you have the option to postpone the starting date for Project B to start on the same date as Project A but that would require a capital infusion (investment) of $2.0 million on each January 1 of the calendar years of 2028 to 2033, would you do it? Assume the life, six years, and cost of capital (discount rate) of 15.0% for Project B are unchanged. 30 c. Assume Project A starts on January 1, 2028 as described above and Project B starts today, on January 1, 2022, as above, both last for six years and requires the yearly investments as described above. Your assistant reminds you still have to calculate the NPV for the two projects. She provides you with the following: The present value, as of today, of all the benefits from Project A is $3.0 million. The present value, as of today, of all the benefits from Project B is $4.0 million. What is the NPV? If you could cancel any of the two projects, would you? Which one and why? . ● bed you Today January 1, 2022, you have been named CFO of iSoftCloud, Inc., a startup in the cloud software industry. The previous CFO already committed to two projects down the road: • Project A is about to start on January 1, 2028 (that is six years from today) and lasts for 6 years (it is closed down on December 31, 2033). On each January 1 of the calendar years of 2028 to 2033, Project A needs an infusion of capital (investment) of $1.0 million. The cost of capital (discount rate) for Project A is 10.0% . Project B is about to start in a few minutes from your celebration of being named the CFO, in other words it has to start on January 1, 2022 (that is today) and lasts for 6 years (it is closed down on December 31, 2027). On each January 1 of the calendar years of 2022 (that is starting today) to 2027, Project B needs an infusion of capital (investment) of $1.0 million. The cost of capital (discount rate) for Project B is 15.0% a. What is the present value as of today, January 1, 2022, of the total funds you'll need to invest for the two projects? b. If you have the option to postpone the starting date for Project B to start on the same date as Project A but that would require a capital infusion (investment) of $2.0 million on each January 1 of the calendar years of 2028 to 2033, would you do it? Assume the life, six years, and cost of capital (discount rate) of 15.0% for Project B are unchanged. 30 c. Assume Project A starts on January 1, 2028 as described above and Project B starts today, on January 1, 2022, as above, both last for six years and requires the yearly investments as described above. Your assistant reminds you still have to calculate the NPV for the two projects. She provides you with the following: The present value, as of today, of all the benefits from Project A is $3.0 million. The present value, as of today, of all the benefits from Project B is $4.0 million. What is the NPV? If you could cancel any of the two projects, would you? Which one and why? . ● bed you
Expert Answer:
Related Book For
Human Resource Management
ISBN: 978-0538453158
13th Edition
Authors: Robert L. Mathis, John H. Jackson
Posted Date:
Students also viewed these accounting questions
-
You have been named as investment adviser to a foundation established by Dr. Walter Jones with an original contribution consisting entirely of the common stock of Jomedco, Inc. Founded by Dr. Jones,...
-
You have been named Human Resources Manager for a company that has 180 employees and no formal base pay system. What steps will you take to develop such a coordinated system?
-
You have been named promotion manager for Maybelline, a well-known brand of cosmetics. You know the brand has been successful in using sales promotion plans lately, but you are concerned about how to...
-
Pepsin is the principal digestive enzyme of gastric juice. A 1.40 g sample of pepsin is dissolved in enough water to make 4.50 mL of solution. The osmotic pressure of the solution is found to be...
-
Staples, Inc., is a leading office products distributor, with retail stores in the United States, Canada, Asia, Europe, and South America. The following financial statement data were taken from...
-
An individual is teaching a class on Excel Macros. The individual plans to break the class up into groups of 4 and wants each group to have a different exercise to practice on. Write an equation that...
-
Show that when two identical detectors in an intensity interferometer have read noise with the same variance \(\sigma_{\text {read }}^{2}\) and when the average intensities incident on the two...
-
The following is a partial list of the account balances, after adjustments, of the Silvoso Company on December 31, 2007: The following information is also available: 1. The company declared and paid...
-
There were 3,110 new cases of COPD in Alabama in 2021, and the population at risk was 5,004,000. The total number of individuals living with COPD in Alabama (including the newly diagnosed cases)...
-
Isorait Co is a company which installs kitchens and bathrooms to customer specifications. It is planning to invest KShs. 4,000,000 in a new facility to convert vans and trucks into motorhomes. Each...
-
Kentaro Hayashi buttoned his uniform shirt and wondered if he could really pull this off. As president of RSA Ground, the subsidiary of Rising Sun Airlines responsible for servicing its planes at...
-
Take me to the textRenegade Landscaping's general ledger includes the following account balances on December 3 1 , 2 0 2 2 . \ table [ [ Accounts Payable,$ 1 3 , 3 4 0 estion 8 ot checked arked out...
-
Concord Corporation began operations in July 2022. At the end of the month, the company prepares monthly financial statements. It has the following information for the month. 1. At July 31, the...
-
QUESTION 1 - 1 POINT For a Sunday dinner party, each guest can choose from the 7 different kinds of food to eat. If any number of food types can be chosen, how many food type combinations are...
-
Exercise 9 - 4 A ( Algo ) Inventory turnover LO 0 9 - 0 2 Selected financial information for Solomon Company for Year 4 follows: \ table [ [ Sales , $ 2 , 3 5 0 , 0 0 0 es Exercise 9-4A (Algo)...
-
6 points Save Answer Write a program in C++ that reads the height and the width from the user, then the program calculates the area and perimeter of a rectangle and printing it. area= height * width...
-
Consider a closed economy consisting of four industries, as depicted in the table. Closed economy with 4 industrien, all values in currency units (CU) Industry 1 Industry 2 Industry 3 Industry 4 100...
-
Q1) What is the a3 Value Q2) What is the a7 Value Q3) What is the a4 Value Q4) What is the b3 Value Q5) What is the b2 Value Q6) What is the sign of 2nd constraint? A pastry chef at a bakery wants to...
-
The leadership in your company has changed as the result of a merger of your company with another company. The other company provides services similar to those provided by your company; however, the...
-
Accenture is a firm that provides a wide range of consulting and services to organizations worldwide. With more than 170,000 employees, the firm has clients in 120 countries that receive many HR and...
-
Discuss how technology has changed jobs in an organization where you have worked. What are some HR responses to those changes?
-
What are the key characteristics of a model that makes it easily testable?
-
What are the drawbacks of constructing analysis patterns using direct approach?
-
What is the concept behind constructing an analysis pattern by using direct approach?
Study smarter with the SolutionInn App