Dog Up! Franks is looking at a new sausage system with an installed cost of $800,000. This cost will be depreciated straight-line to zero over the project’s five-year life, at the end of which the sausage system can be scrapped for $20,000. The sausage system will save the firm $360,000 per year in pretax operating costs. The system also requires an initial investment in net working capital of $48,000, which will be returned in full at the end of the project. Assume that there are no other cash flows. If the tax rate is 25 percent and the discount rate is 12 percent, what is the cash flow from asset of this project in the last year of the project (t=5)?   A. $333,000   B. $373,000   C. $325,000   D. $358,000

You are considering a proposal to produce and market a new sluffing machine. The most likely outcomes for the project are as follows: Expected sales: 115,000 units per year Unit price: $220 Variable cost: $132 Fixed cost: $4,890,000 The project will last for 10 years and requires an initial investment of $16.70 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 30%, and the required rate of return is 12%. However, you recognize that some of these estimates are subject to error. In one scenario a sharp rise in the dollar could cause sales to fall 30% below expectations for the life of the project and, if that happens, the unit price would probably be only $210. The good news is that fixed costs could be as low as $3,260,000, and variable costs would decline in proportion to sales. a. What is project NPV if all variables are as expected? Note: Do not round intermediate calculations. Enter your answer in thousands not in…

Management of Crane Home Furnishings is considering acquiring a new machine that can create customized window treatments. The equipment will cost $209,550 and will generate cash flows of $83,750 over each of the next six years. If the cost of capital is 11 percent, what is the MIRR on this project?

Caroline’s Chill Chronometers (3C) is considering buying a machine for $600 million.  The machine has a useful life of 20 years. Sales are projected to be $120 million per year, with operating expenses of $35 million per year.  An initial NWC investment of $10 million would be needed. NWC, however, would decrease by $300,000 per year over the 15 year life of the project due to improved inventory efficiency.  The machine can be sold for $175 million at the end of the project. The tax rate is 20% and the required rate of return is 7%. Find the NPV using straight-line depreciation.