Question
Motor Vehicles Inc. Founded in 1969, it is a company that produces engines and transmissions under license for the automotive industry. Due to the development
Motor Vehicles Inc. Founded in 1969, it is a company that produces engines and transmissions under license for the automotive industry. Due to the development of the automotive industry and especially the increase in the demands of unique engines and transmissions originating from the defense industry, the company has taken some new investments on its agenda to meet these needs. These investments and related data are as follows:
* Net Cash Flows Regarding Project Proposals
Investment Projects (000,00 TL) | Project 1 Engine and Transmission Casting Line Revision | Project 2 Engine and Transmission Assembly Line Revision |
3. Alloy R&D Laboratory Establishment | 4. From Alloy R&D Laboratory Procurement of services |
Yllar | ||||
0 | - 500.000 | - 240.000 | - 120.000 | - 60.000 |
1 | 45.000 | 30.000 | 10.000 | 0 |
2 | 60.000 | 40.000 | 10.000 | 0 |
3 | 70.000 | 46.500 | 10.000 | 0 |
4 | 80.000 | 60.000 | 10.000 | 0 |
5 | 100.000 | 70.000 | 10.000 | 0 |
6 | 100.000 | 70.000 | 15.000 | 0 |
7 | 100.000 | 75.000 | 15.000 | 0 |
8 | 100.000 | 75.000 | 15.000 | 0 |
9 | 100.000 | 75.000 | 15.000 | 0 |
10 | 100.000 | 75.000 | 15.000 | 0 |
* Motorlu Araclar A.. does not have enough equity to be transferred to the said investments and will only be able to afford the first two projects. Equity cost is 18%.
* It will be necessary to use foreign resources for the third and fourth projects. The interest rate to be applied for the foreign resource will be 20% and will be repaid in equal installments over a 5-year term.
* In all project proposals, the entire investment amount is subject to depreciation and the economic life is 6 years, the weighted depreciation rate is 15%.
* In accordance with the incentive provisions in practice, the corporate tax rate to which the company will be subject will be 20%. * Among these projects, the third project, the Alloy R&D Laboratory Establishment Project, and the fourth project, the Alloy R&D Service Procurement Project, are alternative projects.
1.) Calculate the principal and debt repayments for the foreign resource to be used by the company, and show them in the table.
2.) Calculate the depreciation expenses related to the project proposals and show them in the table. 3.) In the light of the data listed above, using the project evaluation methods, Motorlu Araclar A.. Make the analysis required by the project office. Make the analysis by following the order of evaluation methods described in the lesson.
4.) Interpret the evaluation results of the project proposals on the agenda of Motorlu Araclar A.
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