Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

i need this asap please Jefferson Products Inc. is considering purchasing a new automatic press brake, which costs $310,000 including installation and shipping. The machine

image text in transcribedi need this asap please

Jefferson Products Inc. is considering purchasing a new automatic press brake, which costs $310,000 including installation and shipping. The machine is expected to generate net cash inflows of $65,000 per year for 7 years. At the end of 7 years, the book value of the machine will be $0, and it is anticipated that the machine will be sold for $100,000. If the press brake project is undertaken, Jefferson will have to increase its net working capital by $110,000. When the project is terminated in 7 years, there will no longer be a need for this incremental working capital, and it can be liquidated and made available to Jefferson for other uses. Jefferson requires a 14 percent annual return on this type of project and its marginal tax rate is 40 percent. Use Table II and Table IV to answer the questions. a. Calculate the press brake's net present value. Round your answer to the nearest dollar. $ b. Is the project acceptable? The project is -Select- c. What is the meaning of the computed net present value figure? Round your answer to the nearest dollar. The value of the firm, and therefore the shareholders' wealth, is -Select- by $ d. What is the project's internal rate of return? Round your answer to two decimal places. % as a result of undertaking this project. e. For the press brake project, at what annual rates of return do the net present value and internal rate of return methods assume that the net cash inflows are being reinvested? Round your answers to two decimal places. The net present value calculation assumes the net cash flows are reinvested at cash flows are reinvested at %. %. The internal rate of return calculation assumes the net

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

Profit First For Lawn Care And Landscape Businesses

Authors: Christeen Era, Steven A Rigolosi, Mike Michalowicz

1st Edition

0578908158, 978-0578908151

More Books

Students also viewed these Finance questions

Question

4. How has e-commerce affected business-to-business transactions?

Answered: 1 week ago