2. Bandura, LLC, a Boston-based engineering firm, has cash flows for operating activities of $425,000. Cash flows used for investment in property, plant, and equipment totaled $65,000, of which 70% was used to replace machinery to maintain existing capacity. Required: What is the free cash flow for Bandura, LLC? Calculate it and explain what it means.
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2. Bandura, LLC, a Boston-based engineering firm, has cash flows for operating activities of $425,000. Cash flows used for investment in property, plant, and equipment totaled $65,000, of which 70% was used to replace machinery to maintain existing capacity.
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- 2) Your company recently hired a consulting firm to analyze the cash flows that could be the consultantť's report, the cash flows that can be generated from the upgrade are as follows and generated from upgrading its distribution system. The consulting fees cost $15,000. Based on the company's cost of capital is 10%: Cash Flow (50,000) 25,000 25,000 (5000) 10,000 (5000) Year 1 3 4 State the decision rule(s) that would be the most appropriate for determining whether your firm should undertake this project and calculate the appropriate values. Calculate the IRR, NPV. MIRR, payback, discounted payback, and profitability index for this cash flow stream hg evitscDogwood Company is considering a capital investment in machinery: (Click the icon to view the data.) 8. Calculate the payback. 9. Calculate the ARR. Round the percentage to two decimal places. 10. Based on your answers to the above questions, should Dogwood invest in the machinery? 8. Calculate the payback. Amount invested Expected annual net cash inflow Payback 1,500,000 24 500,000 3 years 9. Calculate the ARR. Round the percentage to two decimal places. Average annual operating income Average amount invested ARR Data Table Initial investment $ 1,500,000 Residual value 350,000 Expected annual net cash inflows 500,000 Expected useful life 4 years Required rate of return 15%Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year 1 2 3 4 5 6 7 8 9 10 Investment $ 54,000 $ 7,000 Cash Inflow $ 5,000 $ 10,000 $ 16,000 $ 17,000 $ 20,000 $ 18,000 $ 16,000 $ 14,000 $ 13,000 $ 13,000 Required: 1. Determine the payback period of the investment. 2. Would the payback period be affected if the cash inflow in the last year were several times as large? Required 1 Required 2 Complete this question by entering your answers in the tabs below. Determine the payback period of the investment. Note: Round your answer to 1 decimal place. Payback period years
- (b) Wong and Partners Sdn. Bhd. plans to purchase a new machine to start a manufacturing plant. Two manufacturers offered the estimates below: Table 1: Cash flows summary of the investments Supplier ASupplier B 100,000 150,000 Item Purchasing Price (RM) Annual Maintenance Cost (RM/ vear) 3.000 Salvage value (RM) Life (year) 2.500 2,000 1,000 6. i. Determine which supplier should be selected based on a present worth comparison if the MARR is 15 % per year. ii. If Wong and Partners Sdn. Bhd. has a standard practice of evaluating all options over a 5-year period. Which vendor should be selected? Assume the salvage values are not expected to changeProject R delegates all the development work to outside companies. The estimated cashflows for Project R are (where brackets indicate expenditure): Beginning of Year 1 Beginning of Year 2 Beginning of Year 3 End of Year 3 (£150,000) (£250,000) (£250,000) £1,000,000 (contractors' fees) (contractors' fees) (contractors' fees) (sales) Project S carries out all the development work in-house by purchasing the necessary equipment and using the company's own staff. The estimated cashflows for Project S are: Beginning of Year 1 Continuous payments Through Year 1 Continuous payments Through Year 2 Continuous payments Through Year 3 End of Year 3 (£150,000) (£75,000) (£250,000) (£250,000) £1,000,000 (New equipment) (Staff Cost) (Staff Cost) (Staff Cost) (sales) a) Calculate the net present value for Project R and Project S using a risk discount rate of 20% per annum. Using net present values as a criterion, which project is preferable? b) Find the internal rate of return for Project R and…The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year ANMA67899 1 2 3 4 5 10 Investment Cash Inflow $ 1,000 $ 2,000 $ 4,000 $ 5,000 $ 30,000 $ 3,000 $ 8,000 $ 6,000 $ 4,000 $ 2,000 $ 1,000 $ 1,000 Required: 1. Determine the payback period of the investment. 2. Would the payback period be affected if the cash inflow in the last year were several times as large? Required 1 Required 2 Complete this question by entering your answers in the tabs below. Determine the payback period of the investment. (Round your answer to 1 decimal place.) Payback period years
- Project R delegates all the development work to outside companies. The estimated cashflows for Project R are (where brackets indicate expenditure):Beginning of Year 1 (£150,000) (contractors’ fees)Beginning of Year 2 (£250,000) (contractors’ fees)Beginning of Year 3 (£250,000) (contractors’ fees)End of Year 3 £1,000,000 (sales)Project S carries out all the development work in-house by purchasing the necessary equipment and using the company’s own staff. The estimated cashflows for Project S are:Beginning of Year 1 (£150,000) (New equipment)Continuous payments Through Year 1 (£75,000) (Staff Cost)Continuous payments Through Year 2 (£250,000) (Staff Cost)Continuous payments Through Year 3 (£250,000) (Staff Cost)End of Year 3 £1,000,000 (sales) Find the internal rate of return for Project R and Project S and hence determine which project is more favourable using this criterion.Project R delegates all the development work to outside companies. The estimated cashflows for Project R are (where brackets indicate expenditure): Beginning of Year 1 (£150,000) (contractors’ fees) Beginning of Year 2 (£250,000) (contractors’ fees) Beginning of Year 3 (£250,000) (contractors’ fees) End of Year 3 £1,000,000 (sales) Project S carries out all the development work in-house by purchasing the necessary equipment and using the company’s own staff. The estimated cashflows for Project S are: Beginning of Year 1 (£150,000) (New equipment) Continuous payments Through Year 1 (£75,000) (Staff Cost) Continuous payments Through Year 2 (£250,000) (Staff Cost) Continuous payments Through Year 3 (£250,000) (Staff Cost) End of Year 3 £1,000,000 (sales) a) Calculate the net present value for Project R and Project S using a risk discount rate of 20% per annum. Using net present values as a criterion, which project is preferable? b) Find the internal rate of return for Project R and…Project R delegates all the development work to outside companies. The estimated cashflows for Project R are (where brackets indicate expenditure):Beginning of Year 1 (£150,000) (contractors’ fees)Beginning of Year 2 (£250,000) (contractors’ fees)Beginning of Year 3 (£250,000) (contractors’ fees)End of Year 3 £1,000,000 (sales)Project S carries out all the development work in-house by purchasing the necessary equipment and using the company’s own staff. The estimated cashflows for Project S are:Beginning of Year 1 (£150,000) (New equipment)Continuous payments Through Year 1 (£75,000) (Staff Cost)Continuous payments Through Year 2 (£250,000) (Staff Cost)Continuous payments Through Year 3 (£250,000) (Staff Cost)End of Year 3 £1,000,000 (sales) Calculate the net present value for Project R and Project S using a risk discount rate of 20% per annum. Using net present values as a criterion, which project is preferable?
- Company Express S. A. asks you to construct cash flows for following three (3) investment projects, containing following information:PROJECT 1a. Sales (in ThCh$):- Year 1: 90,000- Year 2: 55,000- Year 3: 75,000- Year 4: 190,000b. Cost of sales is estimated at 53% of sales.c. Depreciation for year is ThCh$ 15,000 per period (period 1 to 3). In year 4 there is a sale of machinery that results in a gain on sale of non-current assets of ThCh$ 9,800. Total depreciation for year 4 is ThCh$ 12,500.d. Administrative expenses are equivalent to 17% of sales.e. In period 0 there is an investment of ThCh$ 58,000.f. There is credit financing of ThCh$ 32,000 which is amortized in equal parts of ThCh$ 8,000 per period with a financial expense of ThCh$ 3,700 per period.g. There is an investment in working capital of ThCh$ 24,000 in period 0, which is recovered in period 4.h. In period 4 there is an investment in land of ThCh$ 40,000.i. Income tax rate is 17%. Calculate: cash flow per period. Please…In your first job with TBL Inc. your task is to consider a new project whose data are shown below. What is the project's Year 1 cash flow? The annual operating cash flows of the project can be calculated as follows: OCF = {[Sales - Operating Costs]*(1-Tax Rate)} + (Depreciation * Tax Rate) Sales revenues $225,250 Depreciation $78,847 Other operating costs $92,000 Tax rate 18%A company is considering a $184,000 investment in machinery with the following net cash flows. The company requires a 10% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Net Cash Flow (a) Compute the net present value of this investment. (b) Should the machinery be purchased? Required A Required B Year 1 $11,000 Year Year 2 $31,000 Complete this question by entering your answers in the tabs below. Year 1 Year 2 Year 3 Net Cash Flows Year 3 $61,000 Compute the net present value of this investment. (Round your present value factor to 4 decimals. Round your final answers to the nearest whole dollar.) Present Value Factor Year 4 $46,000 Present Value of Net Cash Flows Year 5 $123,000