Bookbinders Co. is making a decision about investing in new technology. It currently expects to earn Php 100,000,000 in its lifetime. If it invests in brand-new equipment today, its expected earnings will permanently increase by 5% per day. What is the expected value of investing in the new equipment?
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- Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated revenue producing lite of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?BookFinders Inc. is making a decision about investing in new technology. It currently expects to earn Php 100,000,000 in its lifetime. If it invests in brand-new equipment today, its expected earnings will permanently increase by 5% per day. What is the expected value of investing in the new equipment?As the manager of a company you wish to invest in a new machine, which costs € 4 million. The annual interest rate is 6%. The expected increase in revenue from the new machine in 2025 and 2026 is € 1,700,000 and € 1,500,000, respectively. The expected increase in revenue in 2027 is highly uncertain. How much must the increase in revenue in 2027 be at least to break even, given the data above? ○ Between € 1,200,000 and € 1,400,000 Between € 800,000 and € 1,000,000 O Between € 1,400,000 and € 1,600,000 O Between € 1,600,000 and € 1,800,000 O Between € 1,000,000 and € 1,200,000
- You are considering investing in a glove manufacturing plant for which you need to immediately pay RM10 million. You expect to produce and sell 10,000 gloves per year. Production commences after 12 months, i.e, at the end of year 1 (which is also the begining of Year 2). You expect production cost to be RM50 per glove. Selling price is estimated at RM100 per glove for the first three years of sales. You are not sure about the sales price after Year 3 because your exclusive patent right expired then. The plant facilities last for 8 years. Cost of capital is 8%. Compute the glove's sales price after Year 3. and this project's NPV Don't you think the price after year 3 is the same as the marginal cost, since at optimum level of output, marginal revenue=marginal cost?You are considering an investment in a clothes distributer. The company needs $104,000 today and expects to repay you $129,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 17%. What does the IRR rule say about whether you should invest?K Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $4.98 million. The product is expected to generate profits of $1.09 million per year for 10 years. The company will have to provide product support expected to cost $98,000 per year in perpetuity. Assume all profits and expenses occur at the end of the year. a. What is the NPV of this investment if the cost of capital is 5.6%? Should the firm undertake the project? Repeat the analysis for discount rates of 1.6% and 14.5%, respectively. b. What is the IRR of this investment opportunity? c. What does the IRR rule indicate about this investment? a. What is the NPV of this investment if the cost of capital is 5.6%? Should the firm undertake the project? Repeat the analysis for discount rates of 1.6% and 14.5%, respectively. If the cost of capital is 5.6%, the NPV will be $ (Round to the nearest dollar.) Should the firm undertake the project? (Select the best choice…
- JTG Instruments is considering an investment of $500,000 in a new product line. The company will make the investment only if it will result in a rate of return of 15% per year or higher. If the revenue is expected to be between $135,000 and $165,000per year for 5 years, determine if the decision to invest is sensitive to the projected range of income using a present worth analysisHome Automation is considering an investment of $500,000 in a new product line. The company will make the investment only if it will result in a rate of return of 15% per year or higher. If the revenue is expected to be between $138,000 and $165,000 per year for 5 years, use a present worth analysis to determine if the decision to invest is sensitive to the projected range of revenue.1. Show your solutions completely. The ABC Freight Company has invested USD80,000 in a new sorting machine that is expected to produce a return of USD9,000 per year for the next 10 years. a.) At a 9% annual interest rate, is this investment worthwhile? b.) If the new machine was not purchased and the amount of USD80,000 was invested in another business that would give a 10% interest rate, what would be the equivalent future amount at the end of 10 years? Mr. Mason wants to open an account in a bank with a 3% interest rate, so he can withdraw after the 25th year the amount of USD4,500 each year for 5 years. a.) How much should he deposit now? b.) should he decide not to withdraw any amount after 25 years, and instead withdraw the whole amount at the end of the 30th year, how much can he withdraw assuming that the interest rate is uniform? c. If Mr. Mason wishes to withdraw the amount of USD4,500 each year for 5 years, beginning at the end of the first year after the making the initial…
- The net present value of an investment is the present value of the expected cash flow minus the initial investment. The company's managers hf. require a 9% return (required rate of return). The managers are considering buying a device that costs ISK 210,000. The device will create a cash flow of ISK 84,000. during the next three years, at the end of each year. What is the net present value of this investment (net present value of investment)? Group of answer choices a. ISK 21,261 b. ISK 212,604 c. ISK 2,629 d. 42,000 ISKInnovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $5 million. The product is expected to generate profits of $1 million per year for 10 years. The company will have to provide product support expected to cost $100,000 per year in perpetuity. Assume all profits and expenses occur at the end of the year. (1) What is the NPV of this investment if the cost of capital is 6%? Should the firm undertake the project? Repeat the analysis for discount rates of 2% and 12%.(2) How many IRRs does this investment opportunity have? (3) Can the IRR rule be used to evaluate this investment? Explain.Ibita Ltd is considering an investment of ₹ 2,80,00,000 (purchase price) in new equipment to replace old equipment with a book value of ₹ 1,20,00,000 and a market value of ₹ 2,00,00,000. If the firm replaces the old equipment with the new equipment, it expects to save ₹ 1,75,00,000 in operating costs the first year. The amount of these savings will grow at a rate of 12 % per year for each of the following three years. The old equipment has a remaining life of four years. It is being depreciated by the straight-line method. 33.3% of the original book value of the new equipment will be depreciated in the first year, 39.9% will be depreciated in the second year, 14.8% will be depreciated in the third year, and 12.0% will be depreciated in the final year. The salvage value of both the old equipment and the new equipment at the end of 4 years is 0. Assume that the purchase and sale of equipment occurs today and all other cash flows occur at the end of their respective years. If the firm’s…