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Please help me to solve this and give me the answers with the clear explanation CHAPTER 10 (Ignore problem 41, but you need information from

Please help me to solve this and give me the answers with the clear explanation

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CHAPTER 10 (Ignore problem 41, but you need information from it to do problem 42) 1. Relevant Cash Hons (L01) White Oak Garden Inc. is looking at setting up a new manufacturing plant in London, Ontario, to produce garden tools. The company bought some land six years ago for $3.5 million in anticipation of using it as a warehouse and distribution site. but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $3.9 million. The company wants to build its new manufacturing plant on this land; the plant will cost $16.70 million to build, and the site requires $350,000 worth of grading before it is suitable for construction. What is the proper cash ow amount to use as the initial investment in xed assets when evaluating this project? Why? 13. Calculating Project OCF (L03) Hubrey Home Inc. is considering a newthreeyear expansion project that requires an initial xed asset investment of $3.9 million. The xed asset falls into Class 10 for tax purposes (CCA rate of 30% per year). and at the end of the three years can be sold for a salvage value equal to its UCC. The project is estimated to generate $2,650,000 in annual sales, with costs of $840,000. If the tax rate is 35%, what is the OCF for each year of this project? Page 3?? l4. Calculating Project NPV {102} In the previous problem, supposed the required return on the project is 12%. What is the project's NW? 22. Project Evaluation (1101, 2) Your rm is contemplating the purchase of a new $425,000 com puterbased order entry system. The PVCCATS is $91,209. and the machine will be worth $30000 at the end of the ve-year life of the system. You will save $130,000 before taxes per year in orderprocessing costs and you will be able to reduce working capital by $60,000 {this is a one-time reduction). If the tax rate is 35%. what is the IRR for this project? 41. Comparing Mutually Exclusive Projects (L04) Kingsmill Industrial Systems Company (KISC) is trying to decide between two different conveyor belt systems. System A costs $290,000, has a fouryear life. and requires $80,000 in pretax annual operating costs. System B costs $35,000. has a sotyear life, and requires $'i'4.000 in pretax annual operating costs. Both systems are to be depreciated at 30% per year (Class 10) and will have no salvage value. Whichever project is chosen, it will not be replaced when it wears out. If the tax rate is 34% and the discount rate is 8%. which project should the rm choose? 42. Comparing Mutuslly Exclusive Projects {[04} Suppose in the previous problem that KISC always needs a conveyor belt system: when one wears out, it must be replaced. Which project should the rm choose now

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