i need the answer quickly Andronicus Corporation (AC) has the following jumbled information about an investment proposal:a. Revenues in each of years 1-4 = $39,000b. Year 0 initial investment = $59,000c. Inventory level = $19,500 in year 1, $21,900 in year 2, and $14,500 in year 3d. Production costs = $12,700 in each of years 1-4e. Salvage value = $13,900 in year 4f. Depreciation = 100% immediate bonus depreciationg. Tax rate = 21%h. There is an additional 6-month lag for all cash flows after year O. For example, customers pay consistently with a 6-month lag, asAC does for production costs, taxes, etc.Draw up a set of cash flow forecasts as in Table 6.4. If the cost of capital is 10%, what is the project's NPV? Assume that, if the projectgenerates losses, those losses can be used to offset profits for tax purposes elsewhere in the business.Note: Do not round your intermediate calculations. Round your final answer to the nearest whole dollar amount.NPVAnswer is complete but not entirely correct.S12,136x

NPV Net present value refers to the capital budgeting technique used to evaluate the profitability…

Answered: Andronicus Corporation (AC) has the…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Andronicus Corporation has the following jumbled information about an investment proposal: a. Revenues in each of years 1-4 = $38,000 b. Year O initial investment = $58,000 c. Inventory level = $19,000 in year 1, $21,300 in year 2, and $14,000 in year 3 d. Production costs $12,400 in each of years 1-4 e. Salvage value = $13,800 in year 4 f. Depreciation = 100% immediate bonus depreciation g. Tax rate 21% h. Customers pay with a 6-month lag Draw up a set of cash flow forecasts as in Table 6.4. If the cost of capital is 12%, what is the project's NPV? Assume that, if the project generates losses, those losses can be used to offset profits elsewhere in the business. Note: Do not round your intermediate calculations. Round your final answer to the nearest whole dollar amount. NPV
Andronicus Corporation has the following jumbled information about an investment proposal: Revenues in each of years 1–3 = $30,000 Year 0 initial investment = $50,000 Inventory level = $15,000 in year 1, $16,500 in year 2, and $10,000 in year 3 Production costs = $10,000 in each of years 1–3 Salvage value = $13,000 in year 4 Depreciation = 100% immediate bonus depreciation Tax rate = 21% Customers pay with a 6-month lag Draw up a set of cash flow forecasts as in Table 6.4. If the cost of capital is 8%, what is the project’s NPV? Assume that, if the project generates losses, those losses can be used to offset profits elsewhere in the business.
Andronicus Corporation has the following jumbled information about an investment proposal: Revenues in each of years 1-3 = $30,000 Year O initial investment = $50,000 Inventory level = $15,000 in year 1, $16,500 in year 2, and $10,000 in year 3 Production costs = $10,000 in each of years 1-3 Salvage value = $13,000 in year 4 Depreciation = 100% immediate bonus depreciation Tax rate=21% Customers pay with a 6-month lag Draw up a set of cash flow forecasts as in Table 6.4. If the cost of capital is 8%, what is the project's NPV? Assume that, if the project generates losses, those losses can be used to offset profits elsewhere in the business.
Consider a project with the following information: Initial fixed asset investment = $515,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price = $47; variable costs = $29; fixed costs = $207,000; quantity sold = 102,000 units; tax rate = 21 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Change in OCF/ Change in Q =?
Harvard Manufacturing Company is considering the following investment proposal: Initial investment: Depreciable assets (straight-line) $48,000 Working capital 4,000 Operations (per year for 4 years): Cash receipts $30,000 Cash expenditures 17,000 Disinvestment: Salvage value of equipment $2,000 Recovery of working capital 4,000 The investment's accounting rate of return (rounded to two decimal points) on the original investment is: Select one: A. 3.85 percent B. 5.88 percent C. 10.71 percent D. 8.33 percent
Windsor Company is considering two capital expenditures. Relevant data for the projects are as follows: Project Initial investment Annual cash inflow Life of project Salvage value A $202,003 $41,080 6 years $0 B $306,910 $49,130 9 years $0 Windsor Company uses the straight-line method to depreciate its assets. Calculate the internal rate of return for each project. (For calculation purposes, use 5 decimal places as displayed in the facto provided, e.g. 1.25125. Round answers to O decimal places, e.g. 15%.)
A company is planning to undertake an investment project. The following data have been calculated for two alternatives, A and B: A B Initial Investment outlay ($) 200,000 275,000 Freight charges 20,000 30,000 Set up charges 5,000 7,000 Economic Life (years) 10 10 Liquidation Value at end of economic life($) 12,000 17,000 Other fixed costs ($/yr) 4,000 20,000 Production and sales volume (units/year) 9,000 12,000 Sales Price ($/unit) 15 15 Variable costs ($/unit) 2.45 2.00 Rate of Interest (%/year) 6% 6% 1. Ascertain the preferred project using: a. The profit comparison method. b. The average rate of return method. C. The static payback method
Andronicus Corporation (AC) has the following jumbled information about an investment proposal: a. Revenues in each of years 1-4 = $21,000 b. Year O initial investment = $41,000 c. Inventory level = $10,500 in year 1, $11,100 in year 2, and $5,500 in year 3 d. Production costs = $7,300 in each of years 1-4 e. Salvage value = $12,100 in year 4 f. Depreciation = 100% immediate bonus depreciation g. Tax rate = 21% h. There is an additional 6-month lag for all cash flows after year O. For example, customers pay consistently with a 6-month lag, as AC does for production costs, taxes, etc. Draw up a set of cash flow forecasts as in Table 6.4. If the cost of capital is 10%, what is the project's NPV? Assume that, if the project generates losses, those losses can be used to offset profits for tax purposes elsewhere in the business. Note: Do not round your intermediate calculations. Round your final answer to the nearest whole dollar amount. NPV Answer is complete but not entirely correct. $…
Consider a project with the following information: Initial fixed asset investment = $550,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price $54; variable costs = $35; fixed costs = $228,000, quantity sold = 116,000 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) AOCFIAQ 9.24
Bridgeport Company is considering two capital expenditures. Relevant data for the projects are as follows: Project Initial investment Annual cash inflow Life of project Salvage value A $260,084 $46,590 Project A 7 years $0 Project B Click here to view the factor table. Bridgeport Company uses the straight-line method to depreciate its assets. B $278,237 Calculate the internal rate of return for each project. (For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25125. Round answers to O decimal places, e.g. 15%.) $44,540 9 years $0 Internal rate of return % %
Consider a four-year project with the following information: Initial fixed asset investment = $560,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $28; variable costs = $20; fixed costs = $200,000; quantity sold = 86,000 units; tax rate = 35 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places,
Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $135,000. Project 2 requires an initial investment of $98,000. Assume the company requires a 10% rate of return on its investments. (PV of $1. FV of $1, PVA of $1. and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Years 1-7 Project 1 Net present value Years 1-5 Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Project 2 Net present value Net Cash Flows Net Cash Flows X x Present Value of Annuity at 10% Project 1 $ 100,000 Present Value of Annuity at…

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