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F. Naz
F. Naz, Bachelor's Degree
Category: Business and Finance Homework
Satisfied Customers: 5241
Experience:  Have completed B.COM and CA Finalist
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I need help with some financial problems

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United Pigpen is considering a proposal to manufacture high-protein hog-feed.The project would make use of an existing warehouse, which is currently rented out to a neighboring firm. The next year’s rental charge on the warehouse in $100,000, and thereafter the rent is expected to grow in line with inflation at 2% a year. In addition to using the warehouse the proposal envisages an investment in plant and equipment of $1 million. However, Pigpen expects to terminate the project at the end of 10 years and to resell the plant and equipment in year 10 for $200,000. The project requires an initial investment in working capital of $300,000. Thereafter, working capital is forecast to be 10% of prior year sales. Year 1 sales of hog feed are expected to be $4 million, and thereafter sales are forecast to grow by 3% a year. Manufacturing costs are expected to be 90% of sales, and profits are subject to tax at 30%. The cost of capital is 12%.


Q1: Assume the investment in plant and equipment can be immediately expensed at year zero (rather than depreciated straight-line over 15 years). How does this change the project's NPV and effective tax rate? Provide a half page discussion explaining the change


Q2: A warehouse was built 5 years at the cost of $1 million, and is being depreciated for tax purposes straight-line over 40 years. Furthermore, yearly maintenance and issuance costs for the warehouse are $5000. Explain how these costs should be included in your NPV calculation. (Calculation is not required. One page maximum.)

It will be my pleasure to do the assignment, by what time do you need the answer thanks.
Customer: replied 3 years ago.

Thank you so much.

Customer: replied 3 years ago.
Relist: Answer came too late.
I have not answered it I have just requested you to tell me your deadline, so I can manage my time and can deliver your assignment, if I provide answer in next 24 hours will it be fine, thanks.
Customer: replied 3 years ago.
Could you please give me the answer today? My deadline is tomorrow morning.
today means in next 12 to 18 hours, will it be fine, thanks.
Customer: replied 3 years ago.
It will be better if I can get the answer within 7 hours. Thank you so much.
I will try my best but can not promise take care.
Do you still need help?
Customer: replied 3 years ago.

Yes. I need the solution as soon as possible.

OK will post the solution shortly.

Customer: replied 3 years ago.

Thank you so much.

F. Naz, Bachelor's Degree
Satisfied Customers: 5241
Experience: Have completed B.COM and CA Finalist
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