Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.71 million and create incremental cash flows of $603,749.00 each year for the next five years. The cost of capital is 8.77%. What is the profitability index for the J-Mix 2000? Submit Answer format: Number: Round to: 3 decimal places.

Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.71 million and create incremental cash flows of $603,749.00 each year for the next five years. The cost of capital is 8.77%. What is the profitability index for the J-Mix 2000? Submit Answer format: Number: Round to: 3 decimal places.

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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Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.90 million and create incremental cash flows of $882,125.00 each year for the next five years. The cost of capital is 10.56%. What is the net present value of the J-Mix 2000? Answer format: Currency: Round to: 2 decimal places.
Database Systems is considering expansion into a new product line. Assets to support expansion will cost $ 500,000. It is estimated that Database can generate $ 1,200,000 in annual sales, with a 6 percent profit margin. What would net income and return on assets ( investment) be for the year? (Round your return on assets to 1 decimal place. Omit the "$" and "%" signs in your response.)
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please show ALL calculation process and explanation. Thank you
OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $501 million and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $70.7 million and its cost of capital is 12.1%. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should OpenSeas go ahead with the purchase? d. How far off could OpenSeas's cost of capital estimate be before your purchase decision would change?
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OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $499 million and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $69.6 million and its cost of capital is 12.0%. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should OpenSeas go ahead with the purchase? d. How far off could OpenSeas's cost of capital estimate be before your purchase decision would change? ...
Incognito Company is contemplating the purchase of a machine that provides it with cash savings of $87,000 per year for five years. Interest is 10%. Assume the cash savings occur at the end of each year. Required: Calculate the present value of the cash savings. Note: Use tables, Excel, or a financial calculator. Round your final answer to the nearest whole dollar. (EV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Present value
Suppose that Calloway golf would like to capitalize on Phil Michelson winning the Open Championship in 2013 by releasing a new putter. The new product will require new equipment for $403,915.00 that will be depreciated using the 5-year MACRS schedule. The project will run for 2 years with the following forecasted numbers: Putter price Units sold COGS Selling and Administrative Year 1 What is the NPV of the project? $64.95 18,393.00 39.00% of sales 21.00% of sales Year 2 $64.95 10,084.00 39.00% of sales 21.00% of sales Calloway has a 13.00% cost of capital and a 39.00% tax rate. The firm expects to sell the equipment after 2 years for a NSV of $136,159.00.
Novak Company is contemplating an investment costing $168,810. The investment will have a life of 8 years with no salvage value and will produce annual cash flows of $30,500. Click here to view PV tables. What is the approximate internal rate of return associated with this investment? (Use the above table.) (Round answer to O decimal places, e.g. 15%) Internal rate of return. %6
Jack Sprat Inc. wants to know if they invest 11,548 in new exercise equipment, plus $2.000 for installation. how long before they will receive their initial invest back from future cash flows? What is the payback period for the initial costs? Projected Cash flows Year 1: 5,000 Year 2: 7,000 Year 3: 4,000 Year 4: 1,000 Post your answer as number of years with 2 decimal places, for example 5.55

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