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I need this answered in the next 2 hours. Otherwise It will be too late. fDetermine the incremental earnings from the purchase of the XC750.
I need this answered in the next 2 hours. Otherwise It will be too late.
\fDetermine the incremental earnings from the purchase of the XC750. Calculate the incremental earnings from the purchase of the XC750 below:(Round to the nearest dollar.) Incremental Earnings Year 0 Sales Revenues $ Cost of Goods Sold $ S, G, and A Expenses $ Depreciation $ EBIT $ Taxes at 35% $ Unlevered Net Income $ (Round to the nearest dollar.) Incremental Earnings Year 110 Sales Revenues $ Cost of Goods Sold $ S, G, and A Expenses $ Depreciation $ EBIT $ Taxes at 35% $ Unlevered Net Income $ b. Determine the free cash flow from the purchase of the XC750. Calculate the free cash flow from the purchase of the XC750:(Round to the nearest dollar.) Incremental Free Cash Flow Year 0 Unlevered Net Income $ Depreciation $ Capital Expenditures $ Change in Net Working Capital $ Free cash flow $ (Round to the nearest dollar.) Incremental Free Cash Flow Year 1 Unlevered Net Income $ Depreciation $ Capital Expenditures $ Change in Net Working Capital $ Free cash flow $ (Round to the nearest dollar.) Incremental Free Cash Flow Year 29 Unlevered Net Income $ Depreciation $ Capital Expenditures $ Change in Net Working Capital $ Free cash flow $ (Round to the nearest dollar.) Incremental Free Cash Flow Year 10 Unlevered Net Income $ Depreciation $ Capital Expenditures $ Change in Net Working Capital $ Free cash flow $ (Round to the nearest dollar.) Incremental Free Cash Flow Year 11 Unlevered Net Income $ Depreciation $ Capital Expenditures $ Change in Net Working Capital $ Free cash flow $ c. If the appropriate cost of capital for the expansion is 10.2 %10.2%, compute the NPV of the purchase. The NPV of the purchase is $ . (Round to the nearest dollar.) d. While the expected new sales will be $ 10.00$10.00 million per year from the expansion, estimates range from $ 8.05$8.05 million to $ 11.95$11.95 million. What is the NPV in the worst case? In the best case? The NPV of the purchase for sales of $ 8.05$8.05 million is $ . (Round to the nearest dollar.) The NPV of the purchase for sales of $ 11.95$11.95 million is $ . (Round to the nearest dollar.) e. What is the breakeven level of new sales from the expansion? The breakeven level of new sales from the expansion is $ . (Round to the nearest dollar.) What is the breakeven level for the cost of goods sold? The breakeven level for the cost of goods sold is $ . (Round to the nearest dollar.) f. Billingham could instead purchase the XC900, which offers even greater capacity. The cost of the XC900 is $ 3.99$3.99 million. The extra capacity would not be useful in the first two years of operation, but would allow for additional sales in years 310. What level of additional sales (above the $ 10.00$10.00 million expected for the XC750) per year in those years would justify purchasing the larger machine? The additional sales are $ . (Round to the nearest dollar.) ANSWERS Question 1 a) What is the project IRR Cash inflow=500000+(900000/1.1^4)=$1114712 Cash outflow=450000 for 3 years Pv @ 10%=1119083 Pv @ required rate 1114712 Pv @11%=1099671 IRR=10%+(1*4371/19412) IRR=10.22% b) The project is not attractive because the cost of capital is greater than the internal rate of return c) What is IRR suppose the final payment in year 4 will be 1000000 Pv @ 6%=1202855 Pv @ required rate 1183013 Pv @7%=1180942 IRR=6%+(1*21913/23984) IRR= 6.9% Question2 a.) what is the IRR of the project Pv @ 6%=1005.4 Pv @ required rate 1000 Pv @7%=971.45 IRR=6%+(1*5/34) IRR= 6.14% b.) if you are choosing between this investment and putting your money in an a safe bank account that pays EAR of 5% per horizon, can you make the decision by simply comparing this IRR of the investment? Explain. You cant make decisions comparing this IRR of the investment because the timing of the cash flows are different Question 2 Year Sales Revenues Cost of Goods Sold S, G, and A Expenses Depreciation 1-10 $ 94.96 $ 75 $ 7.02 $ 0.276 EBIT $ 12.664 Taxes at 35% $ 4.4324 Unlevered Net Income $ 8.2316 b. Determine the free cash flow from the purchase of the XC-750. Calculate the free cash flow from the purchase of the XC-750:(Round to the nearest dollar.) Incremental Free Cash Flow Year Unlevered Net Income Depreciation Capital Expenditures Change in Net Working Capital Free cash flow (Round to the nearest dollar.) 0 $ 8.2316 $ 0.276 $ 5.04 $0 $3 d. While the expected new sales will be $ 10.00$10.00 Million per year from theexpansion, estimates range from $ 8.05$8.05 Million to $ 11.95$11.95 Million. What is the NPV in the worstcase? In the bestcase? The NPV of the purchase for sales of $ 8.05$8.05 million is $49(Round to the nearestdollar.) The NPV of the purchase for sales of $ 11.95$11.95 Million is $73(Round to the nearestdollar.) e. What is thebreak-even level of new sales from theexpansion? Thebreak-even level of new sales from the expansion is $61 (Round to the nearestdollar.) What is thebreak-even level for the cost of goodssold? The break-even level for the cost of goods sold is =$61(Round to the nearest dollar.) Question 3 Eps in 2014 Payout ratio = DPS/EPS 36%=1.07/eps EPS=2.90 Eps in 2014 Payout ratio = DPS/EPS 59%=1.07/eps EPS=1.80 The value of share = stock price * EPS $750.5*2.34=$175.60Step by Step Solution
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