PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Textbook Question
Chapter 6, Problem 7PS
Real and nominal flows Guandong Machinery is evaluating a new project to produce encapsulators. The initial investment in plant and equipment is RMB 500,000.15 Sales of encapsulators in year 1 are
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Students have asked these similar questions
The Bokawkan company is considering to purchase a new machine. Annual cash returns on investment cost of P1,200,000 is expected to be at P220,000. Useful is estimated at 8 years. The company's cost of capital is 14% and income tax rate is 35%. What is the payback reciprocal of the investment?
a. 20.5%
b. 18.3%
c. 11.9%
d. 22.2%
Example
The investment in a new product requires a capital expenditure of € 45,000.-. The economic life time is
five years. The annual fixed operational payments are € 95,000.-. The proportional cash outs per unit
amounts to € 200.-. The internal interest rate (= WACC) is 10% and the number of selling units are
300/year. What is the minimum sales price/unit (x), which ensures the required profitability of the
investment?
Use
a) the NPV method
b) the annuity method!
Finnegan Company plans to invest in a new operating plant that is expected to cost $762,500. The projected incremental income from
the investment is as follows:
Net Income
Year
After Tax
$51,000
$66,000
$71,000
$76,000
$61,000
$41,000
1
4
6.
The unadjusted rate of return on the initial investment would be approximately:
Chapter 6 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 6 - Cash flows Which of the following should be...Ch. 6 - Cash flows Reliable Electric, a major Ruritanian...Ch. 6 - Prob. 3PSCh. 6 - Prob. 4PSCh. 6 - Real and nominal flows Mr. Art Deco will be paid...Ch. 6 - Real and nominal flows Restate the net cash flows...Ch. 6 - Real and nominal flows Guandong Machinery is...Ch. 6 - Working capital Each of the following statements...Ch. 6 - Prob. 9PSCh. 6 - Project NPV Better Mousetraps research...
Ch. 6 - Project NPV A widget manufacturer currently...Ch. 6 - Project NPV Marsha Jones has bought a used...Ch. 6 - Project NPV United Pigpen is considering a...Ch. 6 - Project NPV Imperial Motors is considering...Ch. 6 - Project NPV and IRR A project requires an initial...Ch. 6 - Taxes and project NPV In the International Mulch...Ch. 6 - Depreciation and project NPV Suppose that Sudbury...Ch. 6 - Depreciation and project NPV Ms. T. Potts, the...Ch. 6 - Prob. 20PSCh. 6 - Prob. 21PSCh. 6 - Prob. 22PSCh. 6 - Equivalent annual cash flow Look at Problem 22...Ch. 6 - Equivalent annual cash flow Deutsche Transport can...Ch. 6 - Prob. 25PSCh. 6 - Mutually exclusive investments and project lives...Ch. 6 - Mutually exclusive investments and project lives...Ch. 6 - Mutually exclusive investments and project lives....Ch. 6 - Mutually exclusive investments and project lives...Ch. 6 - Mutually exclusive investments and project lives...Ch. 6 - Replacement decisions Machine C was purchased five...Ch. 6 - Replacement decisions Hayden Inc. has a number of...Ch. 6 - Replacement decisions. You are operating an old...Ch. 6 - Replacement decisions. A forklift will last for...Ch. 6 - The cost of excess capacity The presidents...Ch. 6 - Effective tax rates One measure of the effective...Ch. 6 - Equivalent annual costs We warned that equivalent...
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