ompany is interested in buying a new machine that costs $500,000. year 1 ncf = 126,800  year 2 ncf = 160,670  year 3 ncf = 155,731  year 4 ncf = 144,916  year 5 ncf = 183,065  and the discount rat

YOU ARE A FINANCIAL ANALYST FOR A COMPANY THAT IS CONSIDERING A NEW PROJECT. IF THE PROJECT IS ACCEPTED, IT WILL USE A FRACTION OF A STORAGE FACILITY THAT THE COMPANY ALREADY OWNS BUT CURRENTLY DOES NOT USE. THE PROJECT IS EXPECTED TO LAST 10 YEARS, AND THE ANNUAL DISCOUNT RATE IS 10% (COMPOUNDED ANNUALLY). YOU RESEARCH THE POSSIBILITIES, AND FIND THAT THE ENTIRE STORAGE FACILITY CAN BE SOLD FOR €100,000 AND A SMALLER (BUT BIG ENOUGH) FACILITY CAN BE ACQUIRED FOR €40,000. THE BOOK VALUE OF THE EXISTING FACILITY IS €60,000, AND BOTH THE EXISITING AND THE NEW FACILITIES (IF IT IS ACQUIRED) WOULD BE DEPRECIATED STRAIGHT LINE OVER 10 YEARS (DOWN TO A ZERO BOOK VALUE). THE CORPORATE TAX RATE IS 40%. DISCUSS WHAT IS THE OPPORTUNITY COST OF USING THE EXISTING STORAGE CAPACITY?

Assume that a company is considering purchasing a machine for $50,500 that will have a five-year useful life and no salvage value. The machine will lower operating costs by $17,000 per year. The company's required rate of return is 18%. The profitability index for this investment is closest to: Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice O 0.95. 1.01. 1.05. 1.11.

3. 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 $68.4 million and its cost of capital is 11.6%.   Prepare an NPV profile of the purchase. To plot the NPV profile we compute the NPV of the project for various discount rates and plot the curve. The NPV for a discount rate of 2.0% is $______________________million. ​ (Round to one decimal​ place.) The NPV for a discount rate of 11.5% is $_____________________million. ​  (Round to one decimal​ place.) The NPV for a discount rate of 17.0% is $_____________________million. ​  (Round to one decimal​ place.) The NPV profile​ is:   Graph portion from picture. Identify the IRR on the graph. The approximate IRR from the graph is_______________​%.​(Round your answer to one decimal​ place.)   Should OpenSeas go ahead with the​ purchase?   ​(Select the best choice​ below.)   A.​ No, because at a…

Please solve using Excel and show formulas. You have decided to buy a car with price tag of $60,000 but you are able to negotiate the price down to $58,000.  You have $5,000 saved, so you need to borrow $53,000 in a 5-year loan from your bank (your bank offers lower rates than the auto-dealer) at a 4.5% APR (annual rate). How much will you owe to the bank after 3 years?

What is the value of the abandonment option (in millions), in the question below? Round your answer to two decimal places... Sunshine Smoothies Company (SSC) manufactures and distributes smoothies.It is considering the introduction of a "weight loss" smoothie.The project would require a $4 million investment outlay today (t = 0).The after-tax cash flows would depend on whether the weight loss smoothie is well received by consumers.There is a 30% chance that demand will be good, in which case the project will produce after-tax cash flows of $2 million at the end of each of the next 3 years.There is a 70% chance that demand will be poor, in which case the after-tax cash flows will be $1 million for 3 years.The project is riskier than the firm's other projects, so it has a WACC of 12%.The firm will know if the project is successful after receiving first year's cash flows.After receiving the first year's cash flows it will have the option to abandon the project.If the firm decides to…

Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The cash flows associated with each are shown in the following​ table attached: . The​ firm's cost of capital is 10​%.   a. Calculate the net present value ​(NPV​) of each press.   b. Using​ NPV, evaluate the acceptability of each press.   c. Rank the presses from best to worst using NPV.

Co. has an investment opportunity (Project B) that requires a cash outlay of $18,000 today. They estimate that they will receive in exchange $6,200 in year 1, $6,500 in year 2, and $8,200 in year 3. Our Co 10. Marvelous me a) What are the IRR and the NPV of Project B? b) If the discount rate is 10%, would you invest in Project B? c) Let's imagine that we had a second project (Project B) that has an IRR of 18%. If the crossover rate between these two projects is 13%, which project would you choose when the appropriate discount rate is below that crossover rate?

Assume that a company is considering purchasing a machine for $50,500 that will have a five-year useful life and no salvage value. The machine will lower operating costs by $17,000 per year. The company's required rate of return is 18%. The profitability index for this investment is closest to: Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice C O 0.95. 1.01. 1.05. 1.11.

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 12.0%. 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? SITTE a. Prepare an NPV profile of the purchase. To plot the NPV profile, we compute the NPV of the project for various discount rates and plot the curve. The NPV for a discount rate of 2.0% is $ million. (Round to one decimal place.)