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Use the following information to answer questions 1 - 6 . Consider the following project being analyzed for possible investment at ABC Corp. Initial Cost
Use the following information to answer questions Consider the following project being analyzed for possible investment at ABC Corp. Initial Cost $ Inflow Year $ Inflow Year $ Inflow Year $ Inflow Year $ Inflow Year $ All amounts are in millions. The required return for the project is ABCs benchmark payback rules are as follows: only accept projects with a payback period of years or less, or a discounted payback of years or less. What is the projects NPV What is the projects IRR? What is the projects payback period? What is the projects discounted payback period? What is the projects PI What is the projects MIRR using a reinvestment rate equal to the discount rate of Use the following information to answer questions The Virginia Cane Company VCC is considering investing in a new cane manufacturing machine that has an estimated life of years. The cost of the machine is $ and the machine will be depreciated straightline over its year life to a salvage value of $ While the machine will be fully depreciated over the projects life, management thinks the cane machine can be sold for $ excluding applicable tax, at project end. In the first year, VCC expects to sell canes. The number of canes sold each year is estimated to grow by VCC forecasts that the sale price of $ per cane will remain unchanged over the life of the project. The firms total cost to make each cane, not including depreciation, is $ per cane, and this cost is expected to remain unchanged over the life of the project. Installation of the machine and the resulting increase in sales will require increases in working capital. ABC is budgeting that working capital needs each year will be of the next years revenues. The firm faces a marginal tax rate of and a discount rate of What is the projects total cash flow for year What is the amount that must be additionally invested in working capital at end of year What is the projects total cash flow for year What is the projects IRR?
Use the following information to answer questions
Consider the following project being analyzed for possible investment at ABC Corp.
Initial Cost $
Inflow Year $
Inflow Year $
Inflow Year $
Inflow Year $
Inflow Year $
All amounts are in millions. The required return for the project is
ABCs benchmark payback rules are as follows: only accept projects with a payback period of
years or less, or a discounted payback of years or less.
What is the projects NPV
What is the projects IRR?
What is the projects payback period?
What is the projects discounted payback period?
What is the projects PI
What is the projects MIRR using a reinvestment rate equal to the discount rate of
Use the following information to answer questions
The Virginia Cane Company VCC is considering investing in a new cane manufacturing
machine that has an estimated life of years. The cost of the machine is $ and the machine
will be depreciated straightline over its year life to a salvage value of $ While the machine
will be fully depreciated over the projects life, management thinks the cane machine can be sold
for $ excluding applicable tax, at project end.
In the first year, VCC expects to sell canes. The number of canes sold each year is estimated
to grow by VCC forecasts that the sale price of $ per cane will remain unchanged over the
life of the project. The firms total cost to make each cane, not including depreciation, is $ per
cane, and this cost is expected to remain unchanged over the life of the project.
Installation of the machine and the resulting increase in sales will require increases in working
capital. ABC is budgeting that working capital needs each year will be of the next years
revenues. The firm faces a marginal tax rate of and a discount rate of
What is the projects total cash flow for year
What is the amount that must be additionally invested in working capital at end of year
What is the projects total cash flow for year
What is the projects IRR?
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