Question 23 The Ford Corporation is looking at opening a small manufacturing facility in Richman to produce auto parts. The business is expected to last for 6 years. They expect start- up costs of $3,500,000. Expenses are expected to be $600,000 per year. Revenues will be $900,000 per year. The Ford Corporation estimates that they can sell the facility for $6,000,000 at the end of 6 years. Assume revenue occurs at the end of each year and expenses occur at the beginning of each year. What is the annual cash flow and how many times this cash flow repeated for? A) CO1=$900,000, F01=6 B) C01=$300,000o, F01=6 C) C01=$1,300,000 , F01=6 D) C01-$1,900,000 , F01-6 E) C01=$300,000, F01=5
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- QUESTION 5 A company is thinking about marketing a new product. Up-front costs to market and develop the product are $14.56 Million. The product is expected to generate profits of $1.39 million per year for 26 years. The company will have to provide product support expected to cost $294051 per year in perpetuity. Furthermore, the company expects to invest $40821 per year for 11 years for renovations on the product. This investing would start at the end of year 7. Assume all profits and expenses occur at the end of the year. Calculate the NPV of this project if the interest rate is 7.45%. NOTE: Answer in $. If your answer is 220M, you must answer 220000000.0000. HINT. Compute the present value of all cash flows and then combine them.QUESTION 5 A company is thinking about marketing a new product. Up- front costs to market and develop the product are $11.83 Million. The product is expected to generate profits of $1.48 million per year for 29 years. The company will have to provide product support expected to cost $271554 per year in perpetuity. Furthermore, the company expects to invest $31163 per year for 10 years for renovations on the product. This investing would start at the end of year 7. Assume all profits and expenses occur at the end of the year. Calculate the NPV of this project if the interest rate is 7.66%.19 A company wants to add a manufacturing machine to an existing factory to accommodate rising demand for their product. The factory is close to its effective capacity now, so the new machine will support sales which are expected to grow linearly during the next four years, topping out at $2,000,000 for years 4 and 5. Sales for each year are forecasted to be: Year 1: $1,000,000 ⚫Year 2: $1,500,000 Year 3: $2,000,000 Year 4: $2,000,000 Year 5: $2,000,000 ⚫ Cash operating costs will be 65% of revenue for each year. The machine has an installed cost of $2,000,000, and will be depreciated straightline over 5 years assuming a 10% salvage value. The salvage amount will also be included as part of the terminal value, representing the amount recaptured at the end of year 5. There will be no tax effect in the salvage value because the book value is expected to be 10% of the historical cost at the end of year 5. There will be no need for additional net working capital in the initial investment,…
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- Question 4 Given the initial investment in a factory processing equipment as Ghc500,037. Let the opportunity cost of capital for the industry be 10% p.a. Assuming that the equipment is capable of generating an after-tax returns of Ghc115,000 for the first 5 years and Ghc65000 for the 6th year and Ghc53400 for the 7th year. a. Find the Net Present Value (NPV) b. Determine the Internal Rate of Return c. Identify three ways in which the Net Present value is superior to the Internal Rate of return as investment criteria14. I need help with finance home work question asap please A company is considering a project that would require a cash outflow in the amount of $1,000,000 at the beginning. The company expects the project to generate average annual cash inflows in the amount of $40,000. The average book value for the project is expected to be $250,000 and average annual net income is expected to be $55,000. The company requires a return of 15.25%. What is the average accounting return for this project?Question 2(a) The manufacturing firm Rebo is considering a new capital investment project.The project will last for five years. The anticipated sales revenue from theproject is $3 million in year 1 and $4.2 million in each of years 2 – 5. The cost of materials and labour is 50% of sales revenue and other expenses are $1 million in each year. The project will require working capital investment equal to 20% of the expected sales revenue for each year. This investment must be in place at the start of each year. Working capital will be recovered at the end of the project’s life.The project will require $2.5 million to be spent now on new machinery which will have zero value at the end of the project and will be depreciated each year at 20% of the original cost. The tax rate is 25%. Rebo uses a discount rate of 11% to evaluate its capital investment projects.i. What is the net income in each year?ii. What is the free cash flow in each year and the net present value (NPV)?iii. You discover…
- Engineering Economy Question is image For the end of this year, yearly labor cost of a company is estimated as $35000 and it will increase $4500 per year afterward. To afford labor cost for the next 9 years, how much should the company approximately invest in a bank now when i=20% per year?Elon Musk Capital Project – Assessment #11 Suppose Elon Musk has an existing business making electric bicycles. Sales are so strong that he is considering selling his existing factory and replacing it with a new factory. A: The current factory can be sold for $100mm; it has a tax value of $50mm.The current factory produces annual after tax cash flow of $50mm. Elon believe that after eight years from now, the existing factory would have a resale value of $20mm with a tax value then of $8mm. B: A new bicycle factory can be built for $250mm and equipment will cost $300mm plus installation costs of $50mm. Assume the plant and equipment can be built and operational on day one. C: Expect working capital needs as follows (starting on day one): Increase of $35mm in Accounts Receivable and $50mm of Inventory; expect increased $25mm of Accounts Payable. D: He initially projects after-tax cash flows of $200mm per year for eight years occurring on the last day of each year, starting at the…Elon Musk Capital Project – Assessment #11 Suppose Elon Musk has an existing business making electric bicycles. Sales are so strong that he is considering selling his existing factory and replacing it with a new factory. A: The current factory can be sold for $100mm; it has a tax value of $50mm.The current factory produces annual after tax cash flow of $50mm. Elon believe that after eight years from now, the existing factory would have a resale value of $20mm with a tax value then of $8mm. B: A new bicycle factory can be built for $250mm and equipment will cost $300mm plus installation costs of $50mm. Assume the plant and equipment can be built and operational on day one. C: Expect working capital needs as follows (starting on day one): Increase of $35mm in Accounts Receivable and $50mm of Inventory; expect increased $25mm of Accounts Payable. D: He initially projects after-tax cash flows of $200mm per year for eight years occurring on the last day of each year, starting at the…