裢喇外降餐多大岸 公司理财 PART III 1.The Fleming Company,a food distributor,is considering replacing a filling line at its Oklahoma City warehouse.The existing line was purchased several years ago for $600,000.The line's book value is $200,000,and Fleming management feels it could be sold at this time for $150,000.A new,increased capacity line can be purchased for $1,200,000.Delivery and installation of the new line are expected to cost an additional $100,000.Assuming Fleming's marginal rate is 40 percent,calculate the net investment for the new line. 2.International Foods Corporation (IFC)currently processes seafood with a unit it purchased several years ago.The unit,which originally cost $500,000,currently has a book value of $250,000.IFC is considering replacing the existing unit with a newer,more efficient one.The new unit will cost $700,000 and will require an additional $50,000 for delivery and installation. The new unit also will require IFC to increase its investment in initial new working capital by $40,000.The new unit will be depreciated on a straight-line basis over 5years to a zero balance. IFC expects to sell the existing unit for $275,000.IFC's marginal tax rate is 40 percent. If IFC purchase the new unit,annual revenues are expected to increase by $100,000(due to increased processing capacity),and annual operating costs (exclusive of depreciation)ate expected to decrease by $20,000.Annual revenues and operating costs are expected to remain constant at this new level over the 5-year life of the project.IFC estimates that its net working capital investment will increase by $10,000 per year over the life of the project.After 5 years,the new unit will be completely depreciated and is expected to be sold for $70,000.(Assume that the existing unit is being depreciated at a rate of $50,000 per year.) a.Calculate the project's net investment. b.Calculate the annual net cash flows for the project. 3.Nguyen,Inc.is considering the purchase of a new computer system(ICX)for $130,000.The system will require an additional $30,000 for installation.If the new computer is purchased it will replace an old system that has been fully depreciated.The new system will be depreciated over a period of 10 years using straight-line depreciation.If the ICX is purchased,the old system will be sole for $20,000.The ICX system,which has a useful life of 10 years,is 第1页共9页
公司理财 PART III 1. The Fleming Company, a food distributor, is considering replacing a filling line at its Oklahoma City warehouse. The existing line was purchased several years ago for $600,000. The line’s book value is $200,000, and Fleming management feels it could be sold at this time for $150,000. A new, increased capacity line can be purchased for $1,200,000. Delivery and installation of the new line are expected to cost an additional $100,000. Assuming Fleming’s marginal rate is 40 percent, calculate the net investment for the new line. 2. International Foods Corporation (IFC) currently processes seafood with a unit it purchased several years ago. The unit, which originally cost $500,000, currently has a book value of $250,000. IFC is considering replacing the existing unit with a newer, more efficient one. The new unit will cost $700,000 and will require an additional $50,000 for delivery and installation. The new unit also will require IFC to increase its investment in initial new working capital by $40,000. The new unit will be depreciated on a straight-line basis over 5years to a zero balance. IFC expects to sell the existing unit for $275,000. IFC’s marginal tax rate is 40 percent. If IFC purchase the new unit, annual revenues are expected to increase by $100,000 (due to increased processing capacity), and annual operating costs (exclusive of depreciation) ate expected to decrease by $20,000. Annual revenues and operating costs are expected to remain constant at this new level over the 5-year life of the project. IFC estimates that its net working capital investment will increase by $10,000 per year over the life of the project. After 5 years, the new unit will be completely depreciated and is expected to be sold for $70,000. (Assume that the existing unit is being depreciated at a rate of $50,000 per year.) a. Calculate the project’s net investment. b. Calculate the annual net cash flows for the project. 3. Nguyen, Inc. is considering the purchase of a new computer system (ICX) for $130,000. The system will require an additional $30,000 for installation. If the new computer is purchased it will replace an old system that has been fully depreciated. The new system will be depreciated over a period of 10 years using straight-line depreciation. If the ICX is purchased, the old system will be sole for $20,000. The ICX system, which has a useful life of 10 years, is 第 1 页 共 9 页
旋剥经降贸多去号 公司理财 expected to increase revenues by $32,000 per year over its useful life.Operating costs are expected to decrease by $2,000 per year over the life of the system.The firm is taxed at a 40 percent marginal rate. a.What net investment is required to acquire the ICX system and replace the old system? b.Compute the annual net cash flows associated with the purchase of the ICX system. 4.Benford,Inc.is planning to open a new sporting goods store in a suburban mall.Benford will lease the needed space in the mall.Equpment and fixture for the store will cost $200,000 and be depreciated over a 5-year period on a straight-line basis to $0.The new store will require Benford to increase its net working capital by $200,000 at time 0.First-year sales are expected to be $1 million and to increase at an annual rate of 8 percent over the expected 10-year life of the store.Operating expenses (including lease payments and excluding depreciation)are projected to be $700,000 during the first year and increase at a 7 percent annual rate.The salvage value of the store's equipment and fixture is anticipated to be $10,000 at the end of 10 Years.Benford's marginal tax rate is 40 percent. a.Compute the net investment required for Benford. b.Compute the annual net cash flows for the 10-year projected life of the store. 5.Calculate the net present value of a project with a net investment of $20,000 for equipment and an additional net working capital investment of $5,000 at time 0.The project is expected to generate net cash flows of $7,000 per year over a 10-year estimated economic life.In addition, the net working capital will be recovered at the end of the project.The required return on the project is 11 percent and the company has a marginal tax rate of 40 percent.What is the meaning of the computed net present value figure? 6.Calculate the internal rate of return and profitability index for a project that is expected to generate 8 years of annual net cash flows of $75,000.The project has a net investment of $360,000 and the required return on the project is 12 percent. 7.Two mutually exclusive projects have the following expected cash flow: 第2页共9页
公司理财 expected to increase revenues by $32,000 per year over its useful life. Operating costs are expected to decrease by $2,000 per year over the life of the system. The firm is taxed at a 40 percent marginal rate. a. What net investment is required to acquire the ICX system and replace the old system? b. Compute the annual net cash flows associated with the purchase of the ICX system. 4. Benford, Inc. is planning to open a new sporting goods store in a suburban mall. Benford will lease the needed space in the mall. Equpment and fixture for the store will cost $200,000 and be depreciated over a 5-year period on a straight-line basis to $0. The new store will require Benford to increase its net working capital by $200,000 at time 0. First-year sales are expected to be $1 million and to increase at an annual rate of 8 percent over the expected 10-year life of the store. Operating expenses (including lease payments and excluding depreciation) are projected to be $700,000 during the first year and increase at a 7 percent annual rate. The salvage value of the store’s equipment and fixture is anticipated to be $10,000 at the end of 10 Years. Benford’s marginal tax rate is 40 percent. a. Compute the net investment required for Benford. b. Compute the annual net cash flows for the 10-year projected life of the store. 5. Calculate the net present value of a project with a net investment of $20,000 for equipment and an additional net working capital investment of $5,000 at time 0. The project is expected to generate net cash flows of $7,000 per year over a 10-year estimated economic life. In addition, the net working capital will be recovered at the end of the project. The required return on the project is 11 percent and the company has a marginal tax rate of 40 percent. What is the meaning of the computed net present value figure? 6. Calculate the internal rate of return and profitability index for a project that is expected to generate 8 years of annual net cash flows of $75,000. The project has a net investment of $360,000 and the required return on the project is 12 percent. 7. Two mutually exclusive projects have the following expected cash flow: 第 2 页 共 9 页
链勇经降贸多大是 公司理财 Year G H 0 -$10.000 -$10.000 1 5,000 0 2 5,000 0 3 5,000 17,000 a. Calculate the internal rate of return for each project b.Calculate the net present value for each project,assuming the firm's weighted cost of capital is 12 percent. c.Which project should be adopted?Why? 8.Jefferson Products,Inc.,is considering purchasing a new automatic press brake,which costs #300,000 including installation and shipping.The machine is expected to generate net cash inflows of $80,000 per year for 10 years.At the end of 10 years,the book value if the machine will be $0,and it is anticipated that the machine will be sole for $100,000.If the press brake project is undertaken,Jefferson will have to increase its net working capital by 75,000.When the project is terminated in 10 years,there no longer will be a need for this incremental working capital,and it can be liquidated and made available to Jefferson for other uses.Jefferson requires a 12 percent annual return on this type of project and its marginal tax rate is 40 percent. a.Calculate the press brake's net present value. b.Is the project acceptable? c.What is the meaning of the computed net present value figure? d.What is the project's internal rate of return? e.For the press brake project,at what annual rates of return do the net present value and internal rate of return methods assume that the net cash inflows are being reinvested? 9.Imperial Systems has $1 million available for capital investments during the current year.A list of possible investment projects,together with their net investments and net present values,is provided in the following table: Project Net Investment Net Present Value 第3页共9页
公司理财 Year G H 0 1 2 3 -$10,000 5,000 5,000 5,000 -$10,000 0 0 17,000 a. Calculate the internal rate of return for each project. b. Calculate the net present value for each project, assuming the firm’s weighted cost of capital is 12 percent. c. Which project should be adopted? Why? 8. Jefferson Products, Inc., is considering purchasing a new automatic press brake, which costs #300,000 including installation and shipping. The machine is expected to generate net cash inflows of $80,000 per year for 10 years. At the end of 10 years, the book value if the machine will be $0, and it is anticipated that the machine will be sole for $100,000. If the press brake project is undertaken, Jefferson will have to increase its net working capital by 75,000. When the project is terminated in 10 years, there no longer will be a need for this incremental working capital, and it can be liquidated and made available to Jefferson for other uses. Jefferson requires a 12 percent annual return on this type of project and its marginal tax rate is 40 percent. a. Calculate the press brake’s net present value. b. Is the project acceptable? c. What is the meaning of the computed net present value figure? d. What is the project’s internal rate of return? e. For the press brake project, at what annual rates of return do the net present value and internal rate of return methods assume that the net cash inflows are being reinvested? 9. Imperial Systems has $1 million available for capital investments during the current year. A list of possible investment projects, together with their net investments and net present values, is provided in the following table: Project Net Investment Net Present Value 第 3 页 共 9 页
能男经哈贸多大是 公司理财 $200,000 $20,000 2 500,000 41,000 3 275,000 60,000 4 150,000 5.000 5 250,000 20,000 6 100,000 4,000 1 275.000 22,000 8 200,000 -18.000 a. Rank the various investment projects in terms of their profitability indexes(computed to three decimal places). b.In the order of decreasing profitability index values and considering the capital constraints, which projects should be adopted?Are all capital funds expended? c.Is there another combination that produces a higher aggregate net present value than the one developed in Part b? d.If less than the entire amount of available funds is invested,what is the opportunity cost of the unused funds'？ 10.The Taylor Mountain Uranium Company currently has annual revenues of $1.2 million and annual expenses exclusive of depreciation of $700,000.Depreciation amounts to $200,000 per year.These figures are expected to remain constant for the foreseeable future (at least 15 years).The firm's marginal tax rate is 40 percent. A new high-speed processing unit costing $1.2 million is being considered as a potential investment designed to increase the firm's output capacity.This new piece of equipment will have an estimated usable life of 10 years and a $0 estimated salvage value.If the processing unit is bought,Taylor's annual revenues are expected to increase to $1.6 million,and annual expenses exclusive of depreciation will increase to $900,000.Annual depreciation will increase to $320,000. Assume that mo increase in net working capital will be required as a result of this project. a.Calculate the processing unit's net present value,using a 12 percent required return. b.Should Taylor accept the project? c.How many internal rates of return does the processing unit project have?Why? d.Calculate the processing unit's internal rate of return. 第4页共9页
公司理财 1 2 3 4 5 6 7 8 $200,000 500,000 275,000 150,000 250,000 100,000 275,000 200,000 $20,000 41,000 60,000 5,000 20,000 4,000 22,000 -18,000 a. Rank the various investment projects in terms of their profitability indexes (computed to three decimal places). b. In the order of decreasing profitability index values and considering the capital constraints, which projects should be adopted? Are all capital funds expended? c. Is there another combination that produces a higher aggregate net present value than the one developed in Part b? d. If less than the entire amount of available funds is invested, what is the opportunity cost of the unused funds? 10. The Taylor Mountain Uranium Company currently has annual revenues of $1.2 million and annual expenses exclusive of depreciation of $700,000. Depreciation amounts to $200,000 per year. These figures are expected to remain constant for the foreseeable future (at least 15 years). The firm’s marginal tax rate is 40 percent. A new high-speed processing unit costing $1.2 million is being considered as a potential investment designed to increase the firm’s output capacity. This new piece of equipment will have an estimated usable life of 10 years and a $0 estimated salvage value. If the processing unit is bought, Taylor’s annual revenues are expected to increase to $1.6 million, and annual expenses exclusive of depreciation will increase to $900,000. Annual depreciation will increase to $320,000. Assume that mo increase in net working capital will be required as a result of this project. a. Calculate the processing unit’s net present value, using a 12 percent required return. b. Should Taylor accept the project? c. How many internal rates of return does the processing unit project have? Why? d. Calculate the processing unit’s internal rate of return. 第 4 页 共 9 页
裢贵华经将贸墨去号 公司理财 11.Turbomachinery Parts,Inc.is considering two mutually exclusive equipment investments that would increase its production capacity.The firm uses a 14 percent required rate of return to evaluate capital expenditure projects,The two investments have the following costs and expected cash flow streams; Year Investment D Investment E Year Investment D Investment E 0 -$50,000 -$50,000 4 15.000 1 24.000 15,000 5 15.000 2 24,000 15,000 6 15.000 3 24.000 15.000 a. Calculate the net present value for Investment D and E,using the above data. b.Create a replacement chain for Investment D.Assume that the cost of replacing inflows of $24,000 for years 4 through 6.Using theses figures,recomputed the net present value for Investment D. c.Which of the two investments should be chosen,D or E?Why? d.Use the equivalent annual annuity method to solve the problem.How does your answer compare with the one obtained in Part b? 12.The Jacobs Company is financed entirely with equity.The beta for Jacobs has been estimated to be 1.0.The current risk-free rate is 10 percent and the expected market return is 15 percent. a.What rate of return should Jacobs require on a project of average risk? b.If a new venture is expected to have a beta of 1.6,what rate of return should Jacobs demand on this project? c.The Project in question requires an initial outlay of $9 million and is expected to generate a 10-year stream of annual net cash flows of $1.9 million.Calculate the NPV of the project using Jacobs's required return for projects of average risk. d.Calculate the NPV of the project using the risk-adjusted rate computed in Part b. 13.Homer Store is considering a new location that is expected to yield the following net cash flows following an initial (year 0),certain outlay (NINV)of $75,000: Year Net Cash Flows Certainty Equivalent Factor 第5页共9页
公司理财 11. Turbomachinery Parts, Inc. is considering two mutually exclusive equipment investments that would increase its production capacity. The firm uses a 14 percent required rate of return to evaluate capital expenditure projects, The two investments have the following costs and expected cash flow streams; Year Investment D Investment E Year Investment D Investment E 0 1 2 3 -$50,000 24,000 24,000 24,000 -$50,000 15,000 15,000 15,000 4 5 6 - - - 15,000 15,000 15,000 a. Calculate the net present value for Investment D and E, using the above data. b. Create a replacement chain for Investment D. Assume that the cost of replacing inflows of $24,000 for years 4 through 6. Using theses figures, recomputed the net present value for Investment D. c. Which of the two investments should be chosen, D or E? Why? d. Use the equivalent annual annuity method to solve the problem. How does your answer compare with the one obtained in Part b? 12. The Jacobs Company is financed entirely with equity. The beta for Jacobs has been estimated to be 1.0. The current risk-free rate is 10 percent and the expected market return is 15 percent. a. What rate of return should Jacobs require on a project of average risk? b. If a new venture is expected to have a beta of 1.6, what rate of return should Jacobs demand on this project? c. The Project in question requires an initial outlay of $9 million and is expected to generate a 10-year stream of annual net cash flows of $1.9 million. Calculate the NPV of the project using Jacobs’s required return for projects of average risk. d. Calculate the NPV of the project using the risk-adjusted rate computed in Part b. 13. Homer Store is considering a new location that is expected to yield the following net cash flows following an initial (year 0), certain outlay (NINV) of $75,000: Year Net Cash Flows Certainty Equivalent Factor 第 5 页 共 9 页