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MBA Corp plans to use its idle building that can potentially be rented for $15,000 per annum to set up a manufacturing machinery there. The current Revenue of MBA Corp is $500,000. If the company takes up this project, its revenue is expected to increase by 30% for the next three years and then double (from the 3rd year level) for the next two years. After 5 years, the project will be scrapped and the salvage value is expected to be $80,000 The COGS are expected to remain the same at 60% of revenue. The SG&A and other operating costs will increase by $10,000. The cost of the machinery is expected to be $250,000. The machinery installation cost is expected to be $20,000. This investment will require additional inventory of $40,000 and increase the accounts payable by $20,000 The company spent $ 5000 in researching the viability of the building for machine installation. The company hires you as a financial manager to advise if they should take up this project or not. Other information: Full 100% depreciation is taken for the CAPEX in the year in which it is done Tax rate 25% For calculating WACC, please use the below information: Cost of new Debt: 8% Cost of Preferred Shares: 6% Cost of Equity: Need to calculate Beta 1.2 Rf =2% RM-Rf = 6% Target Capital Structure: Debt: Preferred Sh: Equity = 3:1:6 answer the following questions please: 1. calculate the NPV 2. what is the terminal value 3. what is the conclusion, should the project be undertaken or not and why Subject Finance Sub-subject Search And Sel

MBA Corp plans to use its idle building that can potentially be rented for $15,000 per annum to set up a manufacturing machinery there. The current Revenue of MBA Corp is $500,000. If the company takes up this project, its revenue is expected to increase by 30% for the next three years and then double (from the 3rd year level) for the next two years. After 5 years, the project will be scrapped and the salvage value is expected to be $80,000 The COGS are expected to remain the same at 60% of revenue. The SG&A and other operating costs will increase by $10,000. The cost of the machinery is expected to be $250,000. The machinery installation cost is expected to be $20,000. This investment will require additional inventory of $40,000 and increase the accounts payable by $20,000 The company spent $ 5000 in researching the viability of the building for machine installation. The company hires you as a financial manager to advise if they should take up this project or not. Other information: Full 100% depreciation is taken for the CAPEX in the year in which it is done Tax rate 25% For calculating WACC, please use the below information: Cost of new Debt: 8% Cost of Preferred Shares: 6% Cost of Equity: Need to calculate Beta 1.2 Rf =2% RM-Rf = 6% Target Capital Structure: Debt: Preferred Sh: Equity = 3:1:6 answer the following questions please: 1. calculate the NPV 2. what is the terminal value 3. what is the conclusion, should the project be undertaken or not and why Subject Finance Sub-subject Search And Sel

Chemistry
Chemistry
10th Edition
ISBN:9781305957404
Author:Steven S. Zumdahl, Susan A. Zumdahl, Donald J. DeCoste
Publisher:Steven S. Zumdahl, Susan A. Zumdahl, Donald J. DeCoste
Chapter1: Chemical Foundations
Section: Chapter Questions
Problem 1RQ: Define and explain the differences between the following terms. a. law and theory b. theory and...
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MBA Corp plans to use its idle building that can potentially be rented for $15,000 per annum to set up a manufacturing machinery there. The current Revenue of MBA Corp is $500,000. If the company takes up this project, its revenue is expected to increase by 30% for the next three years and then double (from the 3rd year level) for the next two years. After 5 years, the project will be scrapped and the salvage value is expected to be $80,000 The COGS are expected to remain the same at 60% of revenue. The SG&A and other operating costs will increase by $10,000. The cost of the machinery is expected to be $250,000. The machinery installation cost is expected to be $20,000. This investment will require additional inventory of $40,000 and increase the accounts payable by $20,000 The company spent $ 5000 in researching the viability of the building for machine installation. The company hires you as a financial manager to advise if they should take up this project or not. Other information: Full 100% depreciation is taken for the CAPEX in the year in which it is done Tax rate 25% For calculating WACC, please use the below information: Cost of new Debt: 8% Cost of Preferred Shares: 6% Cost of Equity: Need to calculate Beta 1.2 Rf =2% RM-Rf = 6% Target Capital Structure: Debt: Preferred Sh: Equity = 3:1:6 answer the following questions please: 1. calculate the NPV 2. what is the terminal value 3. what is the conclusion, should the project be undertaken or not and why Subject Finance Sub-subject Search And Sel
Transcribed Image Text:MBA Corp plans to use its idle building that can potentially be rented for $15,000 per annum to set up a manufacturing machinery there. The current Revenue of MBA Corp is $500,000. If the company takes up this project, its revenue is expected to increase by 30% for the next three years and then double (from the 3rd year level) for the next two years. After 5 years, the project will be scrapped and the salvage value is expected to be $80,000 The COGS are expected to remain the same at 60% of revenue. The SG&A and other operating costs will increase by $10,000. The cost of the machinery is expected to be $250,000. The machinery installation cost is expected to be $20,000. This investment will require additional inventory of $40,000 and increase the accounts payable by $20,000 The company spent $ 5000 in researching the viability of the building for machine installation. The company hires you as a financial manager to advise if they should take up this project or not. Other information: Full 100% depreciation is taken for the CAPEX in the year in which it is done Tax rate 25% For calculating WACC, please use the below information: Cost of new Debt: 8% Cost of Preferred Shares: 6% Cost of Equity: Need to calculate Beta 1.2 Rf =2% RM-Rf = 6% Target Capital Structure: Debt: Preferred Sh: Equity = 3:1:6 answer the following questions please: 1. calculate the NPV 2. what is the terminal value 3. what is the conclusion, should the project be undertaken or not and why Subject Finance Sub-subject Search And Sel
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