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Campus requires a return of 14% on its capital investments. 1. As a consultant to Campus, compute: The payback period
1. What is the machine's payback period? 2. Compute the net present value of the machine if the cost of capital is 12%.
Yoshika Landscaping is contemplating purchasing a new ditch-digging machine that promises savings of $5,600 per year for 10 years.
Which projects are acceptable using the profitability index as a screening tool?
Prepare the entry to record the initial franchise fee. Show supporting computations in good form.
Question 1) Why is WACC important to an organization? Question 2) What impact does WACC have on capital budgeting and structure?
Include the advantages and disadvantages of using the ROE and the IRR when selecting projects to invest in overseas.
Working-Capital Requirements: There will be an initial working-capital requirement of $250,000 just to get production started.
Assume the required of return is 15%. What is the projects profitability index?
Assuming a tax rate of 48%, what is the IRR of the replacement?
Please calculate the net present value of this investment. Should you make the investment?
You will have to use Excel or a financial calculator to determine the IRR.
1. Calculate the proposed project's IRR. Explain the rationale for using the IRR to evaluate capital investment projects.
Prepare a brief report for the capital investment committee, advising it on the relative merits of the two investments.
Question 1: What is capital budgeting? How is this process complicated in the international environment?
Compute the cost of capital for the individual components in the capital structure, and then calculate the weighted average cost of capital.
Pappy's is in a 40 percent tax bracket and has a required return of 13 percent. Calculate the payback period, NPV and IRR.
Question: What are the types of budgets and which type is the most important?
What will be the amount of the dividends it pays out after financing its capital budget?
Compute for this project: Book rate of return on the net initial investment.
Managers are trying to determine the company's optimal capital budget for the upcoming year. The company is considering the following projects:
Problem: A corporation is considering two alternative capital structures with the following characteristics:
Interpretive Question: What uncertainties are involved in this decision? Discuss how they might be dealt with.
Use the Capital Budgeting Techniques (NPV & Payback) to decide whether the project should be accepted or rejected.
If the appropriate discount rate is 10%, what is the NPV of the contract?