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UOP FIN571 unit 6 assignment




Question;Problem 10.14;Briarcrest Condiments is a spice-making firm. Recently, it developed a;new process for producing spices. The process requires new machinery that would;cost $2,277,693. have a life of five years, and would produce the cash flows;shown in the following table.;Year;Cash Flow;1;$623,861;2;-218,713;3;759,901;4;1,035,569;5;710,575;What is the NPV if the discount rate is 12.34 percent?(Enter negative amounts;using negative sign e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25.);NPV is;$;Warning;Don't;show me this message again for the assignment;Ok;Cancel;Problem 11.20;Archer Daniels Midland Company is considering buying a new farm that;it plans to operate for 10 years. The farm will require an initial investment;of $11.90 million. This investment will consist of $2.20 million for land and;$9.70 million for trucks and other equipment. The land, all trucks, and all;other equipment is expected to be sold at the end of 10 years at a price of;$5.01 million, $2.19 million above book value. The farm is expected to produce;revenue of $2.10 million each nyear, and annual cash flow from operations;equals $1.98 million. The marginal tax rate is 35 percent, and the appropriate;discount rate is 9 percent. Calculate the NPV of this investment.(Round intermediate;calculations and final answer to 2 decimal places, e.g. 15.25.);NPV;$;The project should be;accepted;rejected.;Problem 11.24;Bell Mountain Vineyards is considering updating its current manual;accounting system with a high-end electronic system. While the new accounting;system would save the company money, the cost of the system continues to;decline. The Bell Mountain?s opportunity cost of capital is 17.2 percent, and;the costs and values of investments made at different times in the future are;as follows;Year;Cost;Value of Future;Savings;(at time of purchase);0;$5,000;$7,000;1;4,100;7,000;2;3,200;7,000;3;2,300;7,000;4;1,400;7,000;5;500;7,000;Calculate;the NPV of each choice.(Round answers to the nearest whole dollar, e.g. 5,275.);The NPV of each choice;is;NPV0 = $;NPV1 = $;NPV2 = $;NPV3 = $;NPV4 = $;NPV5 = $;Suggest;when should Bell Mountain buy the new accounting system?;Bell Mountain should purchase the system in year 5;year 2;year 4;year 1;year 3.;Problem 12.24;Chip?s Home Brew Whiskey management forecasts that if the firm sells;each bottle of Snake-Bite for $20, then the demand for the product will be;15,000 bottles per year, whereas sales will be 86 percent as high if the price;is raised 17 percent. Chip?s variable cost per bottle is $10, and the total;fixed cash cost for the year is $100,000. Depreciation and amortization charges;are $20,000, and the firm has a 30 percent marginal tax rate. Management;anticipates an increased working capital need of $3,000 for the year. What will;be the effect of the price increase on the firm?s FCF for the year?(Round answers to nearest;whole dollar, e.g. 5,275.);At $20 per bottle the Chip?s FCF is $;and at the new price Chip?s FCF is $.;Problem 13.11;Capital Co. has a capital structure, based on current market values;that consists of 39 percent debt, 12 percent preferred stock, and 49 percent;common stock. If the returns required by investors are 9 percent, 12 percent;and 18 percent for the debt, preferred stock, and common stock, respectively;what is Capital?s after-tax WACC? Assume that the firm?s marginal tax rate is;40 percent.(Round intermediate calculations to 4 decimal places, e.g. 1.2514;and final answer to 2 decimal places, e.g. 15.25%.);After tax WACC;=;%


Paper#49320 | Written in 18-Jul-2015

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