Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Texas Roks, Inc. is considering the new quarry machine. Costs and revenues associated with machine have been given to you for analysis given below:

Cost of the new project           $4,000,000
Installation costs                        $100,000
Estimated unit sales in year 1        50,000
Estimated unit sales in year 2        75,000
Estimated unit sales in year 3        40,000
Estimated sales price in year 1         $150
Estimated sales price in year 2         $175
Estimated sales price in year 3         $160
Variable cost per unit                       $120
Annual fixed cost                          $50,000
extra working capital needed      $435,000

Depreciation method

3 years straight-line method, no salvage value

Texas Rok's tax rate 40%

Texas Rok's cost of capital 13%

problems:

1) Compute operating cash flow and change in net working capital.

2) Find out NPV and IRR of the project.

3) Should the company accept or reject project based on the NPV? describe why?

4) Should the company accept or reject project based on the IRR? Describe why?

5) What is your final accept or reject decision? describe why?

6) Determine the payback period for this project? Would this affect your decision to allow or reject?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M914128

Have any Question? 


Related Questions in Basic Finance

How would the recognition policy and impact lags differ

How would the recognition, policy, and impact lags differ with regard to monetary and fiscal policy? What role does uncertainty play?

Using the maximum ratios for a conventional mortgage how

Using the maximum ratios for a conventional mortgage, how big a monthly payment could the clinton family afford if their gross (before tax) monthly income amounted to $3,500? would it make any difference if they were alr ...

Assume the readings on thermometers are normally

Assume the readings on thermometers are normally distributed with a mean of 0 degrees °C and a standard deviation of 1.00 degrees °C. Find the probability that a randomly selected thermometer reads between -1.38 and -0.0 ...

Normal calculationa canadian survey asked grad school

Normal calculation A Canadian survey asked grad school students about the weekly time they spend studying outside the classroom. The time spent studying in minutes follows a normal distribution with mean 720 minutes and ...

Bankers acceptances explain how each of the following would

Banker's Acceptances: Explain how each of the following would use banker's acceptances: (a) exporting firms, (b) importing firms, (c) commercial banks, and (d) investors.

Calculate the pre-tax rate of return in each of these

Calculate the pre-tax rate of return in each of these scenarios. A) Buy 1,000 shares of common stock at $50 and sell at $60 one year later. B) Buy 1,000 shares of common stock at $50 borrowing at 50% of the amount necess ...

What is the present value of 12500 to be received 8 years

What is the present value of $12500 to be received 8 years from today? Assume a discount rate of 4.5% compounded annually and round to the nearest $10.

In excercises 17-36 assume that a randomly selected subject

In excercises 17-36, assume that a randomly selected subject is given a bone density test. Those test scores are normally distributed with a mean of 0 and a standard deviation of 1. In each case, draw a graph and find th ...

Dq cash flow and capital budgetingwhat countryies do you

DQ Cash Flow and Capital Budgeting What country(ies) do you think is(are) presently attractive for U.S. corporations seeking foreign direct investment opportunities? Take into account any geopolitical/economic/currency r ...

Provide a short discussion or definition of the following

Provide a short discussion or definition of the following terms: economics, finance, the financial system, net lenders, net borrowers, direct and indirect finance, financial markets, financial intermediaries, liquidity, ...

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate