Financial Management assignment

There are 25 questions in the DOC.

Please help me out.

1. Oxygen Optimization is considering a project that is expected to cost 6,069 dollars today; produce a cash flow of 10,215 dollars in 4 years, and have an NPV of 648 dollars. What is the cost of capital for the project? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098. 2. Gomi Waste Disposal is evaluating a project that would cost 58,200 dollars today. The project is expected to produce annual cash flows of 4,350 dollars forever with the first annual cash flow expected in 1 year. The NPV of the project is 2,359 dollars. What is the cost of capital of the project? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as . 0098. 3. Fairfax Pizza is evaluating a project that would cost 7,050 dollars today. The project is expected to have the following other cash flows: 2,453 dollars in 1 year, 2,432 dollars in 2 years, and 4,537 dollars in 4 years. The NPV of the project is 79. What is the internal rate of return for the project? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as . 0098. 4. Middlefield Motors is evaluating a project that would require an initial investment of 78,677 dollars today. The project is expected to produce annual cash flows of 7,616 dollars each year forever with the first annual cash flow expected in 1 year. The NPV of the project is 263 dollars. What is the IRR of the project? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098. 5. Fairfax Paint is evaluating a project that would cost 8,153 dollars today. The project is expected to have the following other cash flows: 2,677 dollars in 1 year, 2,422 dollars in 2 years, and 5,537 dollars in 4 years. The internal rate of return for the project is 10.33 percent and the cost of capital for the project is 5.7 percent. What is the net present value of the project? 6. Fairfax Pizza is evaluating a project that would cost 68,000 dollars today. The project is expected to have the following other cash flows: 29,400 dollars in 1 year, 20,600 dollars in 2 years, 21,429 dollars in 3 years, and 8,700 dollars in 4 years. The cost of capital of the project is 9.71 percent. What is the payback period for the project? Round your answer to 2 decimal places (for example, 2.89, 14.70, or 6.00). 7. Oxygen Optimization is evaluating a project that would cost 66,000 dollars today. The project is expected to have the following other cash flows: 22,100 dollars in 1 year, 25,000 dollars in 2 years, 35,110 dollars in 3 years, and 8,900 dollars in 4 years. The cost of capital of the project is 7.67 percent. What is the discounted payback period for the project? Round your answer to 2 decimal places (for example, 2.89, 14.70, or 6.00). 8. Fairfax Pizza is evaluating a 1year project that would involve an initial investment in equipment of 30,000 dollars and an expected cash flow of 31,500 dollars in 1 year. The project has a cost of capital of 4.26 percent and an internal rate of return of 5 percent. If Fairfax Pizza were to use 30,000 dollars in cash from its bank account to purchase the equipment, the net present value of the project would be 214 dollars. However, Fairfax Pizza has no cash in its bank account, so using money from its account is not possible. Therefore, the firm would need to borrow money to raise the 30,000 dollars. If Fairfax Pizza were to borrow money to raise the 30,000 dollars, the interest rate on the loan would be 2.19 percent. Fairfax Pizza would receive 30,000 dollars from the bank at the start of the project and would pay 30,657 dollars to the bank in 1 year. What is the NPV of the project? 9. Gomi Waste Disposal is evaluating a project that would require the purchase of a piece of equipment for 176,000 dollars today. During year 1, the project is expected to have relevant revenue of 111,000 dollars, relevant costs of 47,000 dollars, and relevant depreciation of 20,000 dollars. Gomi Waste Disposal would need to borrow 176,000 dollars today to pay for the equipment and would need to make an interest payment of 9,000 dollars to the bank in 1 year. Relevant net income for the project in year 1 is expected to be 21,965 dollars. What is the tax rate expected to be in year 1? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098. 10. What is the relevant net income for year 1 of project A that Middlefield Motors should use in its NPV analysis of the project? The tax rate is 30 percent. During year 1, the project A is expected to have relevant revenue of 90,000 dollars, relevant variable costs of 27,000 dollars, and relevant depreciation of 18,000 dollars. In addition, Middlefield Motors would have one source of fixed costs associated with the project A. Yesterday, Middlefield Motors signed a deal with Creative Advertising to develop a marketing campaign. The terms of the deal require Middlefield Motors to pay Creative Advertising either 25,000 dollars in 1 year if project A is pursued or 39,000 dollars in 1 year if project A is not pursued. 11. Litchfield Design currently operates 12 studios. The firm is considering project A. This project would involve opening another studio. The only potentially relevant costs involve marketing expenses. Without project A, each of the 12 Litchfield Design studios would be allocated annual marketing expenses of 3,867 dollars in 1 year. With project A, each of the 13 studios that would exist would be allocated annual marketing expenses of 3,722 dollars in 1 year. When determining the relevant annual net income of project A for 1 year from now, what is the relevant amount of total costs that should be included in the analysis of project A? 12. Gomi Waste Disposal currently owns 11 recycling centers and is considering the Portland project, which is a project that would involve opening a(n) 12 th recycling center, which would be in Portland. Without the Portland project, each of the currently owned recycling centers would be allocated annual marketing costs of 4,789 dollars for internal accounting. When determining the relevant net income for the Portland project, relevant marketing costs of 1,483 dollars would be included in the analysis of the Portland project. If each of the 12 recycling centers that would be owned by the company with the Portland project would be allocated the same annual marketing costs for internal accounting, then what marketing costs would be allocated to each recycling center for internal accounting with the Portland project? 13. Fairfax Pizza currently owns 11 restaurants and is considering the Boulder project, which is a project that would involve opening a(n) 12 th restaurant, which would be in Boulder. With the Boulder project, each of the restaurants owned by the company would be allocated annual marketing costs of 2,572 dollars for internal accounting. When determining the relevant net income for the Boulder project, relevant marketing costs of 1,396 dollars would be included in the analysis of the Boulder project. If each of the 11 restaurants that are currently owned by the company would be allocated the same annual marketing costs for internal accounting, then what marketing costs would be allocated to each restaurant for internal accounting without the Boulder project? 14. xygen Optimization is considering the caffeine project, which would involve selling caffeinated oxygen for 1 year. The firm expects sales of caffeinated oxygen to be 64,000 dollars and associated costs from providing caffeinated oxygen (such as tanks, filters, etc.) to be 28,000 dollars. The firm believes that sales of regular oxygen, which is currently sold by the firm, would be 33,000 dollars less with the addition of caffeinated oxygen, and that costs associated with regular oxygen to be 29,000 less with the addition of the caffeinated oxygen. Finally, Oxygen Optimization believes that the introduction of caffeinated oxygen would increase traffic to its facilities, which would increase expected sales of other products (such as masks) by 16,500 dollars more than it would be without the addition of caffeinated oxygen, and increase costs by 8,000 more than it would be without the addition of caffeinated oxygen. What is the relevant net income in year 1 that Oxygen Optimization should use to analyze the caffeine project? The tax rate is 40 percent, the cost of capital is 11.75 percent, and there is no relevant depreciation. 15. Fairfax Pizza is evaluating a project that would require an initial investment in equipment of 100,000 dollars and that is expected to last for 8 years. MACRS depreciation would be used where the depreciation rates in years 1, 2, 3, and 4 are 38 percent, 31 percent, 21 percent, and 10 percent, respectively. For each year of the project, Fairfax Pizza expects relevant, incremental annual revenue associated with the project to be 120,000 dollars and relevant, incremental annual costs associated with the project to be 99,000 dollars. The tax rate is 50 percent. What is (X plus Y) if X is the relevant operating cash flow (OCF) associated with the project expected in year 1 of the project and Y is the relevant OCF associated with the project expected in year 4 of the project? 16. Fairfax Paint operates stores in Virginia. The firm is evaluating the Vienna project, which would involve opening a new store in Vienna. During year 1, Fairfax Paint would have total revenue of 365,000 dollars and total costs of 268,000 dollars if it pursues the Vienna project, and the firm would have total revenue of 305,000 dollars and total costs of 246,000 if it does not pursue the Vienna project. Depreciation taken by the firm would be 97,000 dollars if the firm pursues the project and 77,000 dollars if the firm does not pursue the project. The tax rate is 20 percent. What is the relevant operating cash flow (OCF) for year 1 of the Vienna project that Fairfax Paint should use in its NPV analysis of the Vienna project? 17. Middlefield Motors is evaluating project A, which would require the purchase of a piece of equipment for 374,000 dollars. During year 1, project A is expected to have relevant revenue of 183,000 dollars, relevant costs of 79,000 dollars, and some depreciation. Middlefield Motors would need to borrow 374,000 dollars for the equipment and would need to make an interest payment of 26,180 dollars to the bank in year 1. Relevant net income for project A in year 1 is expected to be 10,000 dollars and operating cash flows for project A in year 1 are expected to be 98,000 dollars. Straightline depreciation would be used. What is the tax rate expected to be in year 1? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098. 18. For project A, the cash flow effect from the change in net working capital is expected to be 300 dollars at time 2 and the level of net working capital is expected to be 1,700 dollars at time 2. What is the level of current liabilities for project A expected to be at time 1 if the level of current assets for project A is expected to be 8,100 dollars at time 1? 19. For project A, the cash flow effect from the change in net working capital is expected to be 300 dollars at time 2 and the level of net working capital is expected to be 1,200 dollars at time 2. What is the level of current assets for project A expected to be at time 1 if the level of current liabilities for project A is expected to be 3,800 dollars at time 1? 20. For project A, the cash flow effect from the change in net working capital is expected to be 100 dollars at time 2, the level of net working capital is expected to be 500 dollars at time 0, and the level of net working capital is expected to be 1,700 dollars at time 2. What is the cash flow effect from the change in net working capital expected to be at time 1? 21. What is the expected aftertax cash flow from selling a piece of equipment if Litchfield Design purchases the equipment today for 130,000 dollars, the tax rate is 40 percent, the equipment is sold in 3 years for 15,000 dollars, and MACRS depreciation is used where the depreciation rates in years 1, 2, 3, 4, and 5 are 35 percent, 25 percent, 24 percent, 10 percent, and 6 percent, respectively? 22. Today, Litchfield Design purchased a piece of equipment for 100,000 dollars that will be depreciated to 15,000 dollars over 17 years using straightline depreciation. What would the aftertax cash flow be from the equipment sale if the equipment is sold in 9 years for 59,000 dollars and the tax rate is 40 percent? 23. Today, Gomi Waste Disposal purchased a piece of equipment for 176,000 dollars that will be depreciated to 85,000 dollars over 7 years using straightline depreciation. What would the aftertax cash flow be from the equipment sale if the equipment is sold in 9 years for 106,000 dollars and the tax rate is 25 percent? 24. Middlefield Motors is evaluating project Z. The project would require an initial investment of 53,000 dollars that would be depreciated to 12,500 dollars over 7 years using straightline depreciation. The project is expected to have operating cash flows of 20,000 dollars per year forever. Middlefield Motors expects the project to have an aftertax terminal value of 326,000 dollars in 5 years. The tax rate is 45 percent. What is (X+Y)/Z if X is the project's relevant expected cash flow in year 5, Y is the project's relevant expected cash flow in year 6, and Z is the project's relevant expected cash flow in year 4? Round your answer to 2 decimal places (for example, 2.89, 0.70, or 1.00). 25. What is the net present value of the stadium project, which is a 3year project where Fairfax Pizza would sell pizza in the baseball stadium? The project would involve an initial investment in equipment of 80,000 dollars today. To finance the project, Fairfax Pizza would borrow 80,000 dollars. The firm would receive 80,000 dollars from the bank today and would pay the bank 103,200 dollars in 3 years (consisting of an interest payment of 23,200 dollars and a principal payment of 80,000 dollars). Cash flows from capital spending would be 0 dollars in year 1, 0 dollars in year 2, and 8,000 dollars in year 3. Operating cash flows are expected to be 42,400 dollars in year 1, 56,000 dollars in year 2, and 18,400 dollars in year 3. The cash flow effects from the change in net working capital are expected to be 16,000 dollars at time 0; 1,000 dollars in year 1; 11,000 dollars in year 2; and 6,000 dollars in year 3. The tax rate is 40 percent. The cost of capital is 5.45 percent and the interest rate on the loan would be 8.86 percent