+1-415-315-9853

info@mywordsolution.com

## Finance

 Basic Finance Corporate Finance Financial Management Financial Econometrics Portfolio Management Risk Management Public Finance Business Law & Ethics

1. (Answer in Excel) Calculating Nominal Cash Flow: Etonic Inc. is considering an investment of \$365,000 in an asset with an economic life of five years. The firm estimates that the nominal annual cash revenues and expenses at the end of the first year will be \$245,000 and \$70,000, respectively. Both revenues and expenses will grow thereafter at the annual inflation rate of 3 percent. Etonic will used the straight-line method to depreciate its asset to zero over five years. The salvage value of the asset is estimated to be \$45,000 in nominal terms at that time. The one-time net working capital investment of \$10,000 is required immediately and will be recovered at the end of the project. All corporate cash flows are subject to a 34 percent tax rate.
a. What is the project's total nominal cash flow from assets for each year?

2. Calculating NPV and IRR for a Replacement: A firm is considering an investment in a new machine with a price of \$18 million to replace its existing machines. The current machine has a book value of \$6 million and a market value of \$4.5 million. The new machine is expected to have a four-year life, and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine, it expects to save \$6.7 million in operating costs each year over the next four years. Both machines will have no salvage value in four years. If the firm purchases the new machine, it will also need an investment of \$250,000 in net working capital. The required return on the investment is 10 percent, and the tax rate is 30 percent. What are the NPV and IRR of the decision to replace the old machine?

3. Project Analysis and Inflation: Sanders Enterprises, Inc. has been considering the purchase of a new manufacturing facility for \$270,000. The Facility is to be fully depreciated on a straight-line basis over seven years. It is expected to have no resale value after the even years. Operating revenues from the facility are expected to be \$105,000, in nominal terms, at the end of the first year. The revenues are expected to increase at the inflation rate of 5 percent. Production costs at the end of the first year will be \$30,000, in nominal terms, and they are expected to increase at 6 percent per year. The real discount rate is 8 percent. The corporate tax rate is 34 percent. Sanders have other profitable operations.
a. Should the company accept the project? describe.

Basic Finance, Finance

• Category:- Basic Finance
• Reference No.:- M925037

Have any Question?

## Related Questions in Basic Finance

### 1 discuss the differences in the loan application for a

1. Discuss the differences in the loan application for a commercial loan and a home loan. 2. Describe the risks involved in commercial real estate investment and financing. 3. What type of work is covered in a land devel ...

### If you could solve this problem using excel that would be

If you could solve this problem using Excel that would be great! 1) A company is considering buying either Machine A or Machine B. Machine Both machines cost \$42,392, but Machine A is expected to last 4 years and generat ...

### Read one practical article of how psychology affects

Read one practical article of how psychology affects behavior when paying taxes. You can easily retrieve possible articles by doing an online search using the terms "psychology" and "paying taxes." Summarize the main poi ...

### 1 how are the results of factorial experimental designs

1. How are the results of factorial experimental designs reported in the research report? 2. What is the purpose of means comparisons, and what different types of means comparisons are there? What do they tell the resear ...

### Conduct a similar analysis on financial leverage for the

Conduct a similar analysis on financial leverage for the same two companies in given Problem. Problem:- Compare the operating leverage of Toyota Motor Corp. (ticker: J:TYMO) with that of Nissan Motor Company Limited (J:N ...

### 1 what are some ways in which scientists get ideas for

1. What are some ways in which scientists get ideas for their research? 2. Why can theories not be proved or disproved by research? 3. Given that proof and disproof are impossible in science, how does scientific knowledg ...

### Using the machine model of example 1012 find the minimum

Using the machine model of Example 10.12, find the minimum initiation interval and a uniform schedule for the iterations, for the following loop: Remember that the counting of iterations is handled by auto-increment of r ...

### Writing in new york magazine sheelah kolhatkar asks an

Writing in New York magazine, Sheelah Kolhatkar asks an intriguing question: A couple of weeks ago, for instance, the investment-management company Vanguard released data showing that men were more likely than women to s ...

### 1 explain the risk premium on a bond2 explain what is meant

1. Explain the risk premium on a bond. 2. Explain what is meant by the risk-return trade-off. 3. Explain how the yield curve can assist bond investors.

### A scheme for the removal of h2s from a gas stream by

A scheme for the removal of H 2 S from a gas stream by scrubbing with water at 293 K and 1.013×10 5  Pa is being considered. The liquid will initially contain 3.7 mol % H 2 S. It is desired that the exiting gas stream co ...

• 13,132 Experts

## 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.

### WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

### 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