Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem: Mills Mining is considering an expansion project. The proposed project has the following features:

[A] The project has an initial cost of dollar 500,000 this is also the price which can be depreciated using the given depreciation schedule:

Year 

Depreciation Rate

1

33%

2

45

3

15

4

7

[A] If the project is undertaken, at t = 0 the company will need to increase its inventories by dollar 50,000, and its accounts payable will rise by dollar 10,000. This net operating working capital will be recovered at the end of the project's life [t = 4]. 
[B] If the project is undertaken, the company will realize an additional dollar 600,000 in sales over each of the next four years [t = 1, 2, 3, 4]. The company's operating cost [not including depreciation] will equal dollar 400,000 a year. 
[C] Tax rate is 40%. 
[D] At t = 4, the project's economic life is complete, but it will have a salvage value of $50,000. 
[E] WACC = 10.5%.

find out the project's net present value (NPV)?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M918193

Have any Question? 


Related Questions in Basic Finance

1 how do you explain why the underwriting spread on ipos

1. How do you explain why the underwriting spread on IPOs averages about 7 percent of the offering price, whereas the underwriting spread on a seasoned offering of common stock averages less than 5 percent? 2. Discuss th ...

Get rich quick a funds management company is considering an

Get Rich Quick, a funds management company, is considering an investment in a new pharmaceutical company. The company will be unable to pay a dividend until the end of Year 6. If a new product is successfully developed f ...

Assignment casethis case has two separate partspart i

Assignment Case This case has two separate parts. Part I: Capital Budgeting Practice Problems a. Consider the project with the following expected cash flows: Year  Cash flow 0 -$400,000 1 $100,000 2 $120,000 3 $850,000 • ...

A an investor buys european call on a share for sh 5 the

a) An investor buys European call on a share for sh 5. The share price is sh 90 and the strike price is sh 85. Under which circumstances does the investor make profit? When will the option be exercised? Draw a diagram to ...

1 why have railroad miles declined during a period of

1. Why have railroad miles declined during a period of national growth? 2. Railroads have the largest percentage of intercity freight ton-miles, but motor carriers have the largest revenue. How do you explain this relati ...

Name the industrywith this case a comparison is made

NAME THE INDUSTRY With this case, a comparison is made between three firms in different industries using net profit margin, total asset turnover and current ratio. 1. Apple Fiscal year 2010 ended September 25, 2010, and ...

Suppose that lilymac photography has annual sales of 222000

Suppose that LilyMac Photography has annual sales of $222,000, cost of goods sold of $157,000, average inventories of $6,300, average accounts receivable of $28,600, and an average accounts payable balance of $19,000. As ...

One bond has 9 years until maturity and a coupon of 42 the

One bond has 9 years until maturity and a coupon of 4.2%. The coupon is paid semiannually. If the YTM is 6%, what is the value of this bond? There is another bond with 15 year to maturity with a coupon rate of 6%. This c ...

Percy motors has a target capital structure of 40 of debt

Percy motors has a target capital structure of 40% of debt and 60% of common equity, with no preferred stock. The pre tax cost of debt is 9% and it's corporate tax rate is 40%. Percy CFO estimate that the companys WACC A ...

Comet pasta company stock currenly sells for 13750 per

Comet Pasta Company stock currenly sells for $137.50 per share. The Company JUST PAID a dividend and that dividend is not expected to grow at all for the next two years, and then it will grow at a constant rate of 10 per ...

  • 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