Blossom Industries operates as an investment center. Buddy Hall, the region's division manager, has set a required minimum rate of return of 15%. Blossom's total assets are $362,000, current liabilities are $162,000, and operating income is $72,000. The company's weighted-average cost of capital is 18% and its tax rate is 28%. Blossom's EVA $
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- The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 22 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Year 0 Year 1 Year 2 Year 3 Year 4 Investment $ 26,500 Sales revenue $ 13,600 $ 15,200 $ 16,600 $ 13,100 Operating costs 3,000 3,150 4,400 3,000 Depreciation 6,625 6,625 6,625 6,625 Net working capital spending 310 210 245 160 ? a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative…The Fleming Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 25 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Year 0 Year 1 Year 2 Year 3 Year 4 Investment $ 34,000 Sales revenue $ 17,500 $ 18,000 $ 18,500 $ 15,500 Operating costs 3,700 3,800 3,900 3,100 Depreciation 8,500 8,500 8,500 8,500 Net working capital spending 400 450 500 400 ? a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A…The Fleming Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 23 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Year 0 Year 1 Year 2 Year 3 Year 4 Investment $ 27,000 Sales revenue $ 14,000 $ 14,500 $ 15,000 $ 12,000 Operating costs 3,000 3,100 3,200 2,400 Depreciation 6,750 6,750 6,750 6,750 Net working capital spending 330 380 430 330 ? a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.)
- The Fleming Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 22 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Year 0 Year 1 Year 2 Year 3 Year 4 Investment $ 41,000 Sales revenue $ 21,000 $ 21,500 $ 22,000 $ 19,000 Operating costs 4,400 4,500 4,600 3,800 Depreciation 10,250 10,250 10,250 10,250 Net working capital spending 470 520 570 470 ? a. Compute the incremental net income of the investment for each year. Year 1, Year 2, Year 3, Year 4 b. Compute the incremental cash flows of the investments for each year. Year 1, Year 2, Year 3, Year 4 c. Suppose the appropriate discount rate…The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 34 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Investment Sales revenue Operating costs Depreciation Net working capital spending Net income Year O $27,000 Year 1 $ Cash flow 330 Year 1 $14,000 $14,500 3,000 6,750 380 280 a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) Year 2 Year 2 Year O $-27330 Year 3 3,100 3,200 6,750 6,750 430 330 3069 $15,000 $12,000 2,400 6,750 ? Year 1 $ Year 4 Year 3 b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) 3333 Year 4 $ Year 2 $ c. Suppose the…You are asked to evaluate the following project for a corporation profitable ongoing operations. The required investment on January 1 of this year is $29,000. The firm will depreciate the investment at a CCA rate of 20 percent. The firm is in the 40 percent tax bracket. The price of the product on January 1 year 1 is $104 per unit. That price will stay constant in real terms. Labour costs is $14.00 per hour on January 1 year 1. Labour costs will increase by 1 percent per year in real terms after year 1. Energy costs will be $7.20 per physical unit on January 1 year 1; energy cost will increase at 2.5 percent per year in real terms after year 1. The inflation rate is 4.1 percent. The company sells all of its production in the year produced; revenue is received and costs are paid at year-end: Physical production, in units Labour input, in hours Energy input, physical units Year 1 150 1,080 180 Year 2 300 1,080 180 Year 3 350 1,080 180 Year 4 150 1,080 180 The risk-free nominal discount…
- A project generates revenues of $10,000, has cash expenses of $800, and depreciation charges of $500 in a particular year. The firm's tax rate is 25%. What is the firm's net income or cash flow from operations?A firm has an average investment of $20,000 during the year. During the same period, the firm generates an after-tax income of $5,000. The cost of capital is 20 percent. Required: a) Calculate the economic value added (EVA) for the firm. b) Calculate the net return on the investment (ROI) for the firm.You are asked to evaluate the following project for a corporation with profitable ongoing operations. The required investment on January 1 of this year is $31.000. The firm will depreciate the investment at a CCA rate of 20 percent. The firm is in the 40 percent tax bracket. The price of the product on January 1 will be $106 per unit. That price will stay constant in real terms. Labour costs will be $15.20 per hour on January 1. They will increase at 1 percent per year in real terms. Energy costs will be $7.30 per physical unit on January 1; they will increase at 2.5 percent per year in real terms. The inflation rate is 3.2 percent. Revenue is recelved and costs are paid at year-end: Year 1 Year 2 Year 3 Year 4 Physical production, in units Labour input, in hours Energy input, physical units 390 1,120 170 340 170 1,120 180 1,120 180 1,120 180 180 The risk-free nominal discount rate is 77 percent. The real discount rate for costs and revenues is 4.7 percent. Calculate the NPV of this…
- Justine is the manager of an investment center. Currently Justine has an ROI of 20%, which is well above the company's average of 15%. The company desires an ROI of new projects to be 12% to be acceptable. Justine's Operating Income is $100,000, and Sales are $1,000,000. What is Justine's Asset Turnover (or Investment Turnover)? Round to the nearest 0.1Global Harmonic Control Systems (GHCS) forecasts its Revenues, to be $500 million in one year. The Revenue is expected to grow at 10 percent per year for the two years and then grow at 8 percent per year for the next two years, and 6 percent per year after that. All Expenses including depreciation are 60 percent of revenues. Net investment, including net working capital and capital spending less depreciation, is 10 percent of revenues. Since all costs are proportional to revenues, net cash flow (sometimes referred to as free cash flow) grows at the same rate as do revenues. GHCS is an all-equity firm with 12 million shares outstanding. A discount rate of 16 percent is appropriate for a firm of GHCS’s risk. Assume tax rate as 40%. Compute for the Price per share of Global Harmonic Control Systems (GHCS).1.) A firm has an average investment of $100,000 during the year. During the same period, the firm generates an after-tax income of $16,000. The cost of capital is 15 percent. what is the economic profit? Required: a.) Calculate the ROI and calculate the Economic Profit.