Question
a) Based upon the following cash flows, Using NPV should Famous Als Cookie Company introduce a new product, Rolling In Dough Pies? The initial investment
a) Based upon the following cash flows, Using NPV should Famous Als Cookie Company introduce a new product, Rolling In Dough Pies? The initial investment is $180,000, and the cost of capital is 40%. 1 $ 80,000 2 $95,000 3 $95,000 4 $110,000 5 $110,000 6 $110,000 (7 marks)
b) Based upon the following cash flows, Using IRR should Famous Als Cookie Company introduce a new product, Rolling In Dough Pies? The initial investment is $180,000, and the cost of capital is 40% and a comparative rate of 50% 1 $80,000 2 $95,000 3 $95,000 4 $110,000 5 $110,000 6 $110,000 (7 marks)
c) Seadocks has just replaced a set of hydraulic screens that had been in operation for 6 years with a newer screening system that cost $180,000 installed. The old system cost $140,000 and had been depreciated as a 10-year MACRS asset. Its salvage value is $10,000. What is the NINV for the new equipment? Assume a 40% tax rate. Use the rounded MACRS schedule listed below: (6 marks) (10-Year Depreciation Schedule: 10%, 18%, 14%, 12%, 9%, 7%, 7%, 7%, 7%, 6%,
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