few finance questions 0

January 14, 2021
discussion 76
January 14, 2021

I need the answers to these:

 Summer Tyme, Inc., is considering a new 4-year expansion project that requires an initial fixed asset investment of \$3.024 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will be worthless. The project is estimated to generate \$2,688,000 in annual sales, with costs of \$1,075,200. If the tax rate is 34 percent and the required return on the project is 14 percent, the NPV for this project is \$

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of \$3.132 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of \$243,600. The project requires an initial investment in net working capital of \$348,000. The project is estimated to generate \$2,784,000 in annual sales, with costs of \$1,113,600. The tax rate is 35 percent and the required return on the project is 14 percent. The NPV for this project is \$

Dog Up! Franks is looking at a new sausage system with an installed cost of \$546,000. This cost will be depreciated straight-line to zero over the project’s 8-year life, at the end of which the sausage system can be scrapped for \$84,000. The sausage system will save the firm \$168,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of \$39,200. If the tax rate is 32 percent and the discount rate is 15 percent, the NPV of this project is \$

 Your firm is contemplating the purchase of a new \$1,260,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth \$112,500 at the end of that time. You will save \$495,000 before taxes per year in order processing costs and you will be able to reduce working capital by \$103,430 (this is a one-time reduction). If the tax rate is 33 percent, the IRR for this project is