Bing Enterprises, Inc., has been considering the purchase of a new manufacturing facilityfor $277,000. The facility is to be fully depreciated on a straight-line basis over sevenyears. It is expected to have no resale value after the seven years. Operating revenuesfrom the facility are expected to be $112,000, in nominal terms, at the end of the firstyear. The revenues are expected to increase at the inflation rate of 3 percent. Productioncosts at the end of the first year will be $37,000, in nominal terms, and they are expectedto increase at 4 percent per year. The real discount rate is 6 percent. The corporate taxrate is 22 percent.Calculate the NPV of the project. (Do not round intermediate calculations and roundyour answer to 2 decimal places, e.g., 32.16.)NPV

The present value of all anticipated cash flows (including inflows and outflows) connected to a…

Answered: Bing Enterprises, Inc., has been…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 12P

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Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
Sanders Enterprises, Inc., has been considering the purchase of a new manufacturing facility for $272,000. The facility is to be fully depreciated on a straight-line basis over seven years. It is expected to have no resale value after the seven years. Operating revenues from the facility are expected to be $107,000, in nominal terms, at the end of the first year. The revenues are expected to increase at the inflation rate of 5 percent. Production costs at the end of the first year will be $32,000, in nominal terms, and they are expected to increase at 6 percent per year. The real discount rate is 8 percent. The corporate tax rate is 34 percent. Calculate the NPV of the project. (Do not round intermediate calculations and round your answer to 2 decimal places
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Bing Enterprises, Inc., has been considering the purchase of a new manufacturing facility for $279,000. The facility is to be fully depreciated on a straight-line basis over seven years. It is expected to have no resale value after the seven years. Operating revenues from the facility are expected to be $114,000, in nominal terms, at the end of the first year. The revenues are expected to increase at the inflation rate of 4 percent. Production costs at the end of the first year will be $39,000, in nominal terms, and they are expected to increase at 5 percent per year. The real discount rate is 7 percent. The corporate tax rate is 24 percent.
Bing Enterprises, Inc., has been considering the purchase of a new manufacturing facility for $278,000. The facility is to be fully depreciated on a straight-line basis over seven years. It is expected to have no resale value after the seven years. Operating revenues from the facility are expected to be $113,000, in nominal terms, at the end of the first year. The revenues are expected to increase at the inflation rate of 5 percent. Production costs at the end of the first year will be $3 8,000, in nominal terms, and they are expected to increase at 6 percent per year. The real discount rate is 8 percent. The corporate tax rate is 23 percent. Calculate the NPV of the project.
Bing Enterprises, Inc., has been considering the purchase of a new manufacturing facility for $281,000. The facility is to be fully depreciated on a straight-line basis over seven years. It is expected to have no resale value after the seven years. Operating revenues from the facility are expected to be $116,000, in nominal terms, at the end of the first year. The revenues are expected to increase at the inflation rate of 3 percent. Production costs at the end of the first year will be $41,000, in nominal terms, and they are expected to increase at 4 percent per year. The real discount rate is 6 percent. The corporate tax rate is 21 percent. Calculate the NPV
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APJ, Inc. is planning to purchase a new machine that will take six years to recover the cost. The new machine is expected to produce cash flow from operations, net of income taxes, of P4,500 a year for the first three years of the payback period and P3,500 a year of the last three years of the payback period. Depreciation of P3,000 a year shall be charged to income of the six years of the payback period. How much shall the machine cost? * A. P12,000 B. P18,000 C. P24,000 D. P36,000

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