Problem 9.24 Management of Great Flights, Inc., an aviation firm, is considering purchasing three aircraft for a total cost of $137,499,019. The company would lease the aircraft to an airline. Cash flows from the proposed leases are shown in the following table. Years 1-4 5-7 8-10 Cash Flow $17,815,000 54,720,000 91,260,000 What is the IRR of this project? (Round answer to 2 decimal places, e.g. 15.25%.) The IRR of this project is You are trying to choose between purchasing one of two machines for a factory. Machine A costs $15,800 to purchase and has a three-year life. Machine B costs $17,200 to purchase but has a four-year life. Regardless of which machine you purchase, it will have to be replaced at the end of its operating life. Which machine should you choose? Assume a marginal tax rate of 35 percent and a discount rate of 13 percent. (Round answers to 2 decimal places, e.g. 15.25.) Equivalent Annual Cost (EAC) of machine A Equivalent Annual Cost (EAC) of machine B Choose Problem 9.17 Emporia Mills management is evaluating two alternative heating systems. Costs and projected energy savings are given in the following table. The firm uses 12.27 percent to discount such project cash flows. Year NMT System 100 $-2,053,200 314,410 520,830 529,940 656,200 System 200 $-1,741,800 701,900 460,300 614,300 314,000 What is the NPV of the systems? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round answers to O decimal places, e.g. 5,275.) NPV of system 100 is $ NPV of system 200 is Which system should be chosen? Emporia should choose You are trying to choose between purchasing one of two machines for a factory. Machine A costs $15,800 to purchase and has a three-year life. Machine B costs $17,200 to purchase but has a four-year life. Regardless of which machine you purchase, it will have to be replaced at the end of its operating life. Which machine should you choose? Assume a marginal tax rate of 35 percent and a discount rate of 13 percent. (Round answers to 2 decimal places, e.g. 15.25.) Equivalent Annual Cost (EAC) of machine A Equivalent Annual Cost (EAC) of machine B Choose Problem 11.11 Capital Co. has a capital structure, based on current market values, that consists of 43 percent debt, 19 percent preferred stock, and 38 percent common stock. If the returns required by investors are 9 percent, 11 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Capital's after-tax WACC? Assume that the firm's marginal tax rate is 40 percent. (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.) After tax WACC Problem 12.16 Blackwell Automotive, Inc., reported the following financial information for the last fiscal year. Blackwell Automotive, Inc. Assets Liabilities and Equity Cash and marketable sec. $ 23,015 Accounts payable and accruals $ 147,000 Accounts Receivable $ 145,000 Notes payable $ 21,115 Inventories $ 242,000 Other current assets $ 11,223 Total current assets $ 421,238 Total current liabilities $ 168,115 Sales and Costs Net sales Cost of goods sold $ 900,000 $ 540,000 Calculate the firm's cash conversion cycle and operating cycle. (Round intermediate calculations and final answers to 1 decimal place, e.g. 15.1.) Blackwell's cash conversion cycle is days and their operating cycle is days. Problem 9.24 Management of Great Flights, Inc., an aviation firm, is considering purchasing three aircraft for a total cost of $137,499,019. The company would lease the aircraft to an airline. Cash flows from the proposed leases are shown in the following table. Years 1-4 5-7 8-10 Cash Flow $17,815,000 54,720,000 91,260,000 What is the IRR of this project? (Round answer to 2 decimal places, e.g. 15.25%.) The IRR of this project is You are trying to choose between purchasing one of two machines for a factory. Machine A costs $15,800 to purchase and has a three-year life. Machine B costs $17,200 to purchase but has a four-year life. Regardless of which machine you purchase, it will have to be replaced at the end of its operating life. Which machine should you choose? Assume a marginal tax rate of 35 percent and a discount rate of 13 percent. (Round answers to 2 decimal places, e.g. 15.25.) Equivalent Annual Cost (EAC) of machine A Equivalent Annual Cost (EAC) of machine B Choose Problem 9.17 Emporia Mills management is evaluating two alternative heating systems. Costs and projected energy savings are given in the following table. The firm uses 12.27 percent to discount such project cash flows. Year NMT System 100 $-2,053,200 314,410 520,830 529,940 656,200 System 200 $-1,741,800 701,900 460,300 614,300 314,000 What is the NPV of the systems? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round answers to O decimal places, e.g. 5,275.) NPV of system 100 is $ NPV of system 200 is Which system should be chosen? Emporia should choose You are trying to choose between purchasing one of two machines for a factory. Machine A costs $15,800 to purchase and has a three-year life. Machine B costs $17,200 to purchase but has a four-year life. Regardless of which machine you purchase, it will have to be replaced at the end of its operating life. Which machine should you choose? Assume a marginal tax rate of 35 percent and a discount rate of 13 percent. (Round answers to 2 decimal places, e.g. 15.25.) Equivalent Annual Cost (EAC) of machine A Equivalent Annual Cost (EAC) of machine B Choose Problem 11.11 Capital Co. has a capital structure, based on current market values, that consists of 43 percent debt, 19 percent preferred stock, and 38 percent common stock. If the returns required by investors are 9 percent, 11 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Capital's after-tax WACC? Assume that the firm's marginal tax rate is 40 percent. (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.) After tax WACC Problem 12.16 Blackwell Automotive, Inc., reported the following financial information for the last fiscal year. Blackwell Automotive, Inc. Assets Liabilities and Equity Cash and marketable sec. $ 23,015 Accounts payable and accruals $ 147,000 Accounts Receivable $ 145,000 Notes payable $ 21,115 Inventories $ 242,000 Other current assets $ 11,223 Total current assets $ 421,238 Total current liabilities $ 168,115 Sales and Costs Net sales Cost of goods sold $ 900,000 $ 540,000 Calculate the firm's cash conversion cycle and operating cycle. (Round intermediate calculations and final answers to 1 decimal place, e.g. 15.1.) Blackwell's cash conversion cycle is days and their operating cycle is days