A project has an initial cost of $40,000, expected net cash inflows of $9,000 per year for 7 years, and a cost of capital of 11%. What is the project's NPV (Begin by constructing a time line)?
Your division is considering two investment projects, each of which requires an upfront expenditure of $15 million. You estimate that the investments will produce the following net cash flows
|
Year
|
Project A
|
Project B
|
|
1
|
$5,000,000.00
|
$20,000,000.00
|
|
2
|
$10,000,000.00
|
$10,000,000.00
|
|
3
|
$20,000,000.00
|
$6,000,000.00
|
What are the two projects net present values assuming the cost of capital is 5%?
10%? 15%?
Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $17 million, and production and sales will require an initial $5 million investment in net operating working capital. The companies tax rate is 40%
What is the initial investment outlay?
The company spent and expensed $150,000 on research related to the new product of last year. Would this change your answer? Explain.
Rather then build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. How would this affect your answer?
The financial staff of Cairn Communications has identified the following information for the first year of the rollout of it's new proposed service:
|
Projected Sales
|
$18,000,000.00
|
|
Operating Costs (not including depreciation)
|
$9,000,000.00
|
|
Depreciation
|
$4,000,000.00
|
|
Interest Expense
|
$3,000,000.00
|
The company faces a 40% tax rate what is the projects operating cash flow for the first year (t=1)?
Alan airlines must liquidate some equipment that is being replaced. The equipment originally cost $12 million, of which 75% has been depreciated. The used equipment can be sold today for $4 million, and it's tax rate is 40%. What is the equipments after-tax net salvage value?