Should they install the fence? Use the discounted cash flow method (NPV and IRR).
Q: What is alternative cash flow measures?
A: Cash flow refers to the amount of cash that moves in and out of the business because of its…
Q: Please calculate cash conversion cycle?
A: Step 1 The cash conversion period (CCC) is a metric that measures how long it takes a business to…
Q: How is payback calculated with equal net cash inflows?
A: A payback period is the amount of time needed to earn back the cost of an investment. The length of…
Q: what is the most likely fair value method to utilize the Discountd Cash Flow model?
A: Discounted Cash Flow: The discounted cash flow model,estimates the intrinsic value of a security…
Q: Help question 20
A:
Q: An example of a cash inflow from investing activities is:
A: The investing activities of a cash flow statement include the purchase and sale of fixed assets and…
Q: Identify which from the following scenarios depict relevant cash flows in making the decision…
A: While making decision for accepting two alternatives, we always consider relevant cost and relevant…
Q: What is nonnormal cash flow projects?
A: Introduction: Cash flow is the cash or cash equivalent transferred from in and out of business.
Q: free cash flow
A: Free cash flow = Cash generated from operations - Capital expenditure incurred
Q: How would a reduction in the cash conversion cycle increase profitability?
A: Cash conversion cycle (CCC): It is a metric that speaks to the time it takes for a business…
Q: What is the total cash flow to Wayne after the sale? To Berkman Investment Bank?
A: Computation of the number of shares available for auction: Authorized shares = 5,240,000 Less:…
Q: Find the cash price of a generator
A: We will find present value using below formula: Amount(1/1+i)n+….
Q: Define the concept of cash conversion cycle and what is the difference between the operating cycle…
A: Calculating and analyzing a company's operational and cash cycles over time is an excellent…
Q: nds that it can draw on. o reduce collection time t wear to operate.
A: Lock box is a system where that can be utilized to reduce the time between customer sending a check…
Q: All of the followings are True when the net present value method is used to choose between two…
A: Net present value is the excess of present value of cash flows over cash outflows or initial…
Q: What cash flows are discounted in the FCFE model, and what is the discount rate?
A: FCFE MODEL: FCFR is known as free cash flow to equity or levered free cash flow, it is a model…
Q: Depending on the cash flow assumption, should the project must use continuous cash flow? why?
A: In continuous discounting and continuous cash flows, the assumption is that the cash stream happens…
Q: When using the NPV method for a particular investment decision, if the present value of all cash…
A: When NPV method is used the investment is measured on three scenarios Positive NPV Where the…
Q: Explain with an example of how we can balance cash investments?
A: Cash investments are short term investments, normally less than 90 days, which usually provides…
Q: solve this cash flow
A: Cash flow refers to the balance of the cash inflows and outflows of a business over a period of…
Q: Explain the Incremental Cash Flows from Undertaking a Project?
A: Incremental cash flows It is an additional amount of net cash flows produced by the project…
Q: In this method, the company compares the amount spent on the investment with the discounted expected…
A: a. Payback is the period in which the investment can break-even. b. NRV is the difference of…
Q: Explain Loan versus Project Cash Flows?
A: Accounting: Accounting is a system, or a process of collecting and organizing economic…
Q: What is discounting and why do we discount future cash flows?
A: A cash flow statement is a financial statement that shows how much cash and cash equivalents are…
Q: How can we compute incremental cash flow, and IRR?
A: Incremental cash flows and IRR, both are the terms of Capital Budgeting decisions. Incremental cash…
Q: Achieving profitability will automatically assure sufficient amounts of cash. True or false?
A: Profitability is the ability of the company to earn a profit. Profit is an amount of revenue over…
Q: What should a firm’s goal be regarding the cash conversion cycle,holding other things constant?…
A: The cash conversion cycle refers to the number of days between paying for crude materials or…
Q: What do we mean by the cash conversion cycle? Explain how it works
A: Cash Conversion Cycle is used to measure the time it takes an organization to convert it's resources…
Q: In the discounted cashflow method, the discount rate is used for the following reasons EXCEPT a. it…
A: Discounted Cashflow Method: The discounted cash flow (DCF) approach is a method of valuation that is…
Q: What are the strenghts and weaknesses of the discount cash flow methods?
A: discounted cash flow methods are used to calculate to find the future cash inflow discount into its…
Q: What is free cash flow valuation model?
A: Free cash flow (FCF) is the amount of money available to an organization at their complete disposal,…
Q: What is meant by the incremental cost of borrowing additional funds?
A: Incremental cost as the name indicates is the additional cost which a borrower will incur if the…
Q: e following methods of capital budgeting tries to equate the present value of cash inflows to…
A: Present value refers to the current valuation for a future sum. Investors determine the present…
Q: How to do Cash Flow Projection when investing? give a example.
A: Cash flow cash flow (CFI) is one of the components of a cash flow statement that reports the amount…
Q: The discounted payback method considers the time value of money as well as the cash flows after the…
A: Introduction: This question is related to the concept of capital budgeting. It is nothing but an…
Q: we can still calculate the IRR on incremental cash flows. True or false? Explain with example?
A: True, IRR can be still computed on incremental cash flow. IRRIt is the technique of discounted cash…
Q: Discuss a scenario where it would be appropriate to use one the present value of cash flow technique…
A: Cash flow techniques are one of the most accepted method in capital budgeting , cash flows are the…
Q: “The greater the discount rate, the greater the present value of a future cash flow.” True or false?…
A: Present Value: The value of today's amount expected to be paid or received in the future at a…
Q: Why are the net present value and internal rate of return considered discounted cash flow methods?
A: Net present value is the comparison between the net cash inflows received from a future investment…
Q: Discuss the following statement. A manager believes that changes in NWC can be ignored from your…
A: Net working capital means difference between the current assets and current liabilities.
Q: Which of the following statements is CORRECT? Assume that the project being considered has normal…
A: Point 1 is not correct as IRR is not found using this method. Cash flows cannot be compounded at…
Q: analyze cash flow and compute for the unknown value. show complete solution, thank you.
A: Year Deposit / Investment 0 0 1 5 2 5 3 5 4 10 5 15 6 20 7 25 8 30 9 35 10 40…
Q: How should I think about the discount rate in a discounted cash flow model, and what it means (in…
A: Discount rates are the rates at which cash flows over the estimated time period are discounted.…
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- Friedman Company is considering installing a new IT system. The cost of the new system is estimated to be 2,250,000, but it would produce after-tax savings of 450,000 per year in labor costs. The estimated life of the new system is 10 years, with no salvage value expected. Intrigued by the possibility of saving 450,000 per year and having a more reliable information system, the president of Friedman has asked for an analysis of the projects economic viability. All capital projects are required to earn at least the firms cost of capital, which is 12 percent. Required: 1. Calculate the projects internal rate of return. Should the company acquire the new IT system? 2. Suppose that savings are less than claimed. Calculate the minimum annual cash savings that must be realized for the project to earn a rate equal to the firms cost of capital. Comment on the safety margin that exists, if any. 3. Suppose that the life of the IT system is overestimated by two years. Repeat Requirements 1 and 2 under this assumption. Comment on the usefulness of this information.The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000, with annual net cash flows of $9,950 for 8 years. The required rate of return is 6%. Compute the net present value of this investment to determine whether or not you would recommend that Ham and Egg invest in this oven.Although the Chen Company’s milling machine is old, it is still in relatively good working order and would last for another 10 years. It is inefficient compared to modern standards, though, and so the company is considering replacing it. The new milling machine, at a cost of $110,000 delivered and installed, would also last for 10 years and would produce after-tax cash flows (labor savings and depreciation tax savings) of $19,000 per year. It would have zero salvage value at the end of its life. The project cost of capital is 10%, and its marginal tax rate is 25%. Should Chen buy the new machine?
- Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided manufacturing system. The annual net cash benefits and savings associated with the system are described as follows: The system will cost 9,000,000 and last 10 years. The companys cost of capital is 12 percent. Required: 1. Calculate the payback period for the system. Assume that the company has a policy of only accepting projects with a payback of five years or less. Would the system be acquired? 2. Calculate the NPV and IRR for the project. Should the system be purchasedeven if it does not meet the payback criterion? 3. The project manager reviewed the projected cash flows and pointed out that two items had been missed. First, the system would have a salvage value, net of any tax effects, of 1,000,000 at the end of 10 years. Second, the increased quality and delivery performance would allow the company to increase its market share by 20 percent. This would produce an additional annual net benefit of 300,000. Recalculate the payback period, NPV, and IRR given this new information. (For the IRR computation, initially ignore salvage value.) Does the decision change? Suppose that the salvage value is only half what is projected. Does this make a difference in the outcome? Does salvage value have any real bearing on the companys decision?The heat loss through the exterior walls of a processing plant is estimated to cost the owner $3,000 next year. A salesman from Superfiber, Inc. claims he can reduce the heat loss cost by 80% with the installation of $15,000 of Superfiber now. If the cost of heat loss rises by $200 per year, after next year (gradient), and the owner plans to keep the building ten more years, what is his rate of return, neglecting depreciation and taxes Show complete solution pls. No excel computationThe heat loss through the exterior walls of a processing plant is expected to cost the owner $3000 next year. A salesman from Superfiber, Inc. claims he can reduce the heat loss by 80% with the installation of $15,000 worth of Superfiber now. If the cost of heat loss rises by $200 per year, after next year (gradient), and the owner plans to keep the building 10 years, what is his rate of return, neglecting depreciation and taxes?
- Dell is considering replacing one of its material handling systems. It has an annual O&M cost of $48,000, a remaining operational life of 8 years, and an estimated salvage value of $6,000 at that time. A new system can be purchased for $175,000. It will be worth $50,000 in 8 years, and it will have annual O&M costs of only $17,000 per year due to new technology. If the new system is purchased, the old system will be traded in for $55,000, even though the old system can be sold for only $45,000 on the open market. Leasing a new system will cost $31,000 per year, payable at the beginning of the year, plus operating costs of $15,000 per year payable at the end of the year. If the new system is leased, the existing material handling system will be sold for its market value of $45,000. Use a planning horizon of 8 years, an annual worth analysis, and MARR of 15% to decide which material handling system to recommend: (i) keep existing, (ii) trade in existing and purchase new, or (iii)…Blooper Industries must replace its magnoosium purification system. Quick & Dirty Systems sells a relatively cheap purification system for $10 million. The system will last 5 years. Do-It-Right sells a sturdier but more expensive system for $12 million, it will last for 8years. Both systems entail $1 million in operating costs; both will be depreciated in an asset class that has a CCA rate of 30%; neither will have any salvage value at the end of its life. The firm's tax rate is 35%, and the discount rate is 12%. Which system should blooper install? The answer should be in excel with details, please?Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $180,000 and has an estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net annual cash flows of $34,000. Management also believes that the new bottling machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 12%. Click here to view the factor table. Calculate the net present value. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to 0 decimal places, e.g. 125.) Net present value $ How much would the reduction in downtime have to be worth in order for the project to be acceptable? (Round answer to O decimal places, e.g. 125.)
- Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $180,000 and has an estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net annual cash flows of $34,000. Management also believes that the new bottling machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 12%. Click here to view the factor table. Calculate the net present value. (If the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to O decimal places, e.g. 125.) Net present value $ How much would the reduction in downtime have to be worth in order for the project to be acceptable? (Round answer to O decimal places, e.g. 125.)Kingbird Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $200,000 and has an estimated useful life of eight years with zero salvage value. Management estimates that the new bottling machine willprovide net annual cash flows of $39,500. Management also believes that the new machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 12%. Click here to view the factor table. Calculate the net present value. (lf the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.8. 1.25124. 5 Round present value answer to 0 decimal places, e.8. 1,250.) 1. net present value? 2. How much would the reduction in downtime have to be worth in order for the project to be acceptable? Present value of reduction…Vigour Pharmaceuticals Ltd. is considering investing in a new production line for its pain-reliever medicine for individuals who suffer from cardio vascular diseases. The company has to invest in equipment which costs $2,500,000 and will be depreciated under the MACRS system for a 5-year asset class. It is expected to have a scrap value of $700,000 at the end of the project. Other than the equipment, the company needs to increase its cash and cash equivalents by $100,000, increase the level of inventory by $30,000, increase accounts receivable by $250,000 and increase account payable by $50,000 at the beginning of the project. Vigour Pharmaceuticals expect the project to have a life of five years. The company would have to pay for transportation and installation of the equipment which has an invoice price of $450,000. The company has already invested $75,000 in Research and Development and therefore expects a positive impact on the demand for the new pain-reliever. Expected annual…
