Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

1) You have been asked by president of your firm to estimate proposed acquisition of new special-purpose equipment. Equipment's base price is= $500,000, and another= $50,000 for its installation costs. Equipment falls into MACRS 3-year class, and it will be sold at end of the project’s 2-year life for= $250,000. Use of equipment will need net working capital investment equivalent to= 20% of following year’s incremental revenues. Equipment will rise annual revenues by= $100,000, and save firm= $200,000 in annual operating costs. Annual revenues and operating costs are expected to rise at the annual rate of= 10% in the 2nd-year of project. This equipment will be placed in the unoccupied site, which can otherwise be sold for= $100,000 today. This site will be sold for same price at termination of project. Depreciation of this site that your firm owns can be ignored. Firm's tax rate is= 30% and discount rate for project is 12%.

(a) find out initial outlay of the project.

(b) find out the operating cash flows in Years 1 and 2.

(c) find out non-operating cash flow at the ending of Year 2.

(d) What is your suggestion on this project according to conceptually most right capital budgeting method? describe why?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M915143

Have any Question? 


Related Questions in Basic Finance

Advance inc is trying to determine its cost of debt the

Advance, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 16 years to maturity that is quoted at 105 percent of face value. The issue makes semiannual payments and has a coupon ra ...

In early 2009 an article in the new york times

In early 2009, an article in the New York Times observed: "Without a cure for the problem of bad assets, the credit crisis that is dragging down the economy will linger, as banks cannot resume the ample lending needed to ...

1 define an appraisal2 what qualifications does a mortgage

1. Define an appraisal. 2. What qualifications does a mortgage lender require of an appraiser? 3. Name the three most common appraisal report formats and how they differ in content and use. 4. Describe each of the three ...

1 selecting a bank steve just received his first paycheck

1. Selecting a Bank. Steve just received his first paycheck and wants to open a checking account. There are five banks in his hometown. What factors should Steve consider when choosing a bank? 2. Influence of Interest Ra ...

1 why do researchers want the error variance in their data

1. Why do researchers want the error variance in their data to be small? 2. Why do researchers use meta-analysis?

The allied group is considering two investments the first

The Allied Group is considering two investments. The first investment involves a packaging machine, which can be used to package garments for shipping orders to customers. The second possible investment would be a moldin ...

Assignmentwrite a 3- to 5-page essay about the ethical and

Assignment Write a 3- to 5-page essay about the ethical and financial implications of insider trading. Note: Some of the assessments in this course build upon each other, so you are strongly encouraged to complete them i ...

Discuss the ways a firm could increase its cash balances eg

Discuss the ways a firm could increase its cash balances (e.g. float, etc.), why it may want to do so and where it could invest the funds.

1 what is financial leverage why is a one-year measure of

1. What is financial leverage? Why is a one-year measure of return on investment inadequate in determining whether positive or negative financial leverage exists? 2. What is the motivation for a sale-leaseback of the lan ...

A company will purchase a new machine with a cost of 750000

A company will purchase a new machine with a cost of $750,000. The machine requires aninitial investment in net working capital of $25,000. Net working capital will remain at this levelduring the life of the machine and ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen