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this is the all info that i have. it has four pictures. 18. Buhler Industries is a farm implement manufacturer. Management is current evaluating a
this is the all info that i have.
18. Buhler Industries is a farm implement manufacturer. Management is current evaluating a proposal to build a plant that will manufacture lightweight tractors, Buhler plans to use a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental free cash flow projections (in millions of dollars): Year o Years 1-9 Year 10 100.0 100.0 Revenues - Manufacturing expenses (other than depreciation) -35.0 -35.0 -10.0 -10.0 - Marketing expenses - 2 = EBIT Universet income Increases in networking capital -5.0 - Capital expenditures - 150,0 Continuation value -Free cash flow -- 1500 The relevant CCA rate for capital expenditures is 10% mere renew solid For the case scenario what is the NPV of the plant to match Bhout from the link deput file without ro or capital expenditur R. Asetare never othecario, what is the NPV of the plant to manufacture Bichcht tractor? Med on input from the marketing department, Buhler is uncertain about it rever forecast. In particular, management would like to examine the nativity of the NPV to the revenue assumptions. What is the NPV of this project of revenues are 10% higher than forecast? What is the NPV if reventies are 10% lower than forecast? c. Rather than assuming that cash flows for this project are constant, management would like to explore the sensitivity of its analysis to pouble growth in revenues and operating expenses. Specifically, management would like to me that revenues, manufacturing expenses, and marketing expenses are as pven in the table for year 1 and grow by 2% per year every year starting in year 2. Management also plans to assume that the initial capital expenditures (and therefore CCA), addition to working capital, and continuation value remain as initially specified in the table. What is the NPV of this project under these tentive assumption How does the NPV change of the events and operating expenses grow by per year rather than by 2 d. Termine the sensitivity of this project to the discount ce management like to compute the NPV for different discount e Greate ph with the discount ralenthe - and the NIV on they for discount rates antrom 5 to 30%. For whates of discountates does tlw projecte Rather than assuming that cash flows for this project are constant, management would like to explore the sensitivity of its analysis to possible growth in revenues and operating expenses. Specifically, management would like to assume that revenues, manufacturing expenses, and marketing expenses are as given in the table for year 1 and grow by 2% per year every year starting in year 2. Management also plans to assume that the initial capital expenditures (and therefore CCA), additions to working capital, and continuation value remain as Initially specified in the table. What is the NPV of this project under these alternative assumptions? How does the NPV change if the revenues and operating expenses grow by 5% per year rather than by 2% d. To emine the sensitivity of this project to the discount rate, management would like to compute the NPV for different discount rates. Create a graph, with the discount rate on the taxis and the NPV on the y-axis, for discount rates mancing from 3 to 30%. For what ranges of discount rates does the project have NPV 18. Buhler Industries is a farm implement manufacturer. Management is current evaluating a proposal to build a plant that will manufacture lightweight tractors, Buhler plans to use a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental free cash flow projections (in millions of dollars): Year o Years 1-9 Year 10 100.0 100.0 Revenues - Manufacturing expenses (other than depreciation) -35.0 -35.0 -10.0 -10.0 - Marketing expenses - 2 = EBIT Universet income Increases in networking capital -5.0 - Capital expenditures - 150,0 Continuation value -Free cash flow -- 1500 The relevant CCA rate for capital expenditures is 10% mere renew solid For the case scenario what is the NPV of the plant to match Bhout from the link deput file without ro or capital expenditur R. Asetare never othecario, what is the NPV of the plant to manufacture Bichcht tractor? Med on input from the marketing department, Buhler is uncertain about it rever forecast. In particular, management would like to examine the nativity of the NPV to the revenue assumptions. What is the NPV of this project of revenues are 10% higher than forecast? What is the NPV if reventies are 10% lower than forecast? c. Rather than assuming that cash flows for this project are constant, management would like to explore the sensitivity of its analysis to pouble growth in revenues and operating expenses. Specifically, management would like to me that revenues, manufacturing expenses, and marketing expenses are as pven in the table for year 1 and grow by 2% per year every year starting in year 2. Management also plans to assume that the initial capital expenditures (and therefore CCA), addition to working capital, and continuation value remain as initially specified in the table. What is the NPV of this project under these tentive assumption How does the NPV change of the events and operating expenses grow by per year rather than by 2 d. Termine the sensitivity of this project to the discount ce management like to compute the NPV for different discount e Greate ph with the discount ralenthe - and the NIV on they for discount rates antrom 5 to 30%. For whates of discountates does tlw projecte Rather than assuming that cash flows for this project are constant, management would like to explore the sensitivity of its analysis to possible growth in revenues and operating expenses. Specifically, management would like to assume that revenues, manufacturing expenses, and marketing expenses are as given in the table for year 1 and grow by 2% per year every year starting in year 2. Management also plans to assume that the initial capital expenditures (and therefore CCA), additions to working capital, and continuation value remain as Initially specified in the table. What is the NPV of this project under these alternative assumptions? How does the NPV change if the revenues and operating expenses grow by 5% per year rather than by 2% d. To emine the sensitivity of this project to the discount rate, management would like to compute the NPV for different discount rates. Create a graph, with the discount rate on the taxis and the NPV on the y-axis, for discount rates mancing from 3 to 30%. For what ranges of discount rates does the project have NPV it has four pictures.
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