Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

can you answer the following questions on the attachment doc. Nelson Mfg. owns a manufacturing facility that is currently sitting idle. The facility is located

image text in transcribed

can you answer the following questions on the attachment doc.

image text in transcribed Nelson Mfg. owns a manufacturing facility that is currently sitting idle. The facility is located on a piece of land that originally cost $159,000. The facility itself cost $1,390,000 to build. As of now, the book value of the land and the facility are $159,000 and $458,000, respectively. The firm owes no debt on either the land or the facility at the present time. The firm received a bid of $1,700,000 for the land and facility last week. The firm's management rejected this bid even though they were told that it is a reasonable offer in today's market. If the firm was to consider using this land and facility in a new project, what cost, if any, should it include in the project analysis? A. $1,700,000 B. $0 C. $1,083,000 D. $1,619,000 E. $617,000 When the present value of the cash inflows exceeds the initial cost of a project, then the project should be: A. Rejected because the internal rate of return is negative. B. Accepted because the profitability index is negative. C. Accepted because the profitability index is greater than 1. D. Rejected because the net present value is positive. E. Accepted because the payback period is less than the required time period. PGH, Inc. is considering a new sixyear expansion project that requires an initial fixed asset in vestment of $3.102 million. The fixed asset will be depreciated straightline to zero over its six year tax life, after which time it will be worthless. The project is estimated to generate $1,987,000 in annual sales, with costs of $1,102,200. The tax rate is 35 percent and the re quired return on the project is 16 percent. What is the net present value for this project? A. $435,008.04 B. $432,155.56 C. $316,081.72 D. $134,217.78 E. $134,098.28 HH Companies has identified two mutually exclusive projects. Project A has cash flows of $40,000, $21,200, $16,800, and $14,000 for Years 0 to 3, respectively. Project B has a cost of $40,000 and annual cash inflows of $25,500 for 2 years. At what rate would you be indifferent between these two projects? A. 5.70 percent B. 8.28 percent C. 16.34 percent D. 9.41 percent E. 12.72 percent

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Financial Reporting A Practical Guide

Authors: Alan Melville

6th edition

1292200743, 1292200766, 9781292200767, 978-1292200743

More Books

Students also viewed these Finance questions