• 100% Satisfaction Guarantee

Linda_us, Finance, Accounts & Homework Tutor
Category: Homework
Satisfied Customers: 7291
Experience:  Post Graduate Diploma in Management (MBA)
19873544
Linda_us is online now

Its been two months since you took a position as an assistant

Resolved Question:

It’s been two months since you took a position as an assistant financial analyst at Caledonia Products. Although your boss has been pleased with your work, he is still a bit hesitant about unleashing you without supervision. Your next assignment involves both the calculation of the cash flows associated with a new investment under consideration and the evaluation of several mutually exclusive projects. Given your lack of tenure at Caledonia, you have been asked not only to provide a recommendation, but also to respond to a number of questions aimed at judging your understanding of the capital-budgeting process. The memorandum you received outlining your assignment follows:

To: XXXXX XXXXX Financial Analyst
From: Mr. V. Morrison, CEO, Caledonia Products

Re: Cash Flow Analysis and Capital Rationing

We are considering the introduction of a new product. Currently we are in the 34% tax bracket with a 15% discount rate. This project is expected to last five years and then, because this is somewhat of a fad project, it will be terminated. The following information describes the new project:

Cost of new plant and equipment: \$ 7,900,000
Shipping and installation costs: \$ 100,000

Unit sales:
Sales price per unit: \$300/unit in years 1–4 and \$260/unit in year 5.
Variable cost per unit: \$180/unit
Annual fixed costs: \$200,000 per year

Working capital requirements: There will be an initial working capital requirement of \$100,000 just to get production started. For each year, the total investment in net working capital will be equal to 10% of the dollar value of sales for that year. Thus, the investment in working capital will increase during years 1 through 3, then decrease in year 4. Finally, all working capital is liquidated at the termination of the project at the end of year 5. Depreciation method: Straight-line over 5 years assuming the plant and equipment have no salvage value after 5 years.

I need answers for the following two questions with work shown please.

5. What is the project’s net present value?
6. What is its internal rate of return?
Submitted: 3 years ago.
Category: Homework
Expert:  Linda_us replied 3 years ago.

You need to spend \$3 to view this post. Add Funds to your account and buy credits.
Linda_us, Finance, Accounts & Homework Tutor
Category: Homework
Satisfied Customers: 7291
Experience: Post Graduate Diploma in Management (MBA)
Customer: replied 3 years ago.

Thank you very much.

Expert:  Linda_us replied 3 years ago.

You are welcome. I would appreciate if you could provide the feedback by clicking smiley as that is the only way I get paid for helping you.

Customer: replied 3 years ago.

Sorry, I didnt know that. Yes I will click the smiley. One more question are you sure these are correct?

Expert:  Linda_us replied 3 years ago.
I am 100% sure. If you need I can provide you all 7 part including the part where actual cash flow needs to be calculated.
Expert:  Linda_us replied 3 years ago.
Hi

I'm just following up with you to see how everything is going. Did my answer help?

Let me know,
Linda
Expert:  Linda_us replied 3 years ago.
Hi

I'm just following up with you to see how everything is going. Did my answer help?

Let me know,
Linda

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

• Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
< Previous | Next >
• Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
• This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
• Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
• I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin Kernersville, NC
• Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther Woodstock, NY
• Thank you so much for taking your time and knowledge to support my concerns. Not only did you answer my questions, you even took it a step further with replying with more pertinent information I needed to know. Robin Elkton, Maryland
• He answered my question promptly and gave me accurate, detailed information. If all of your experts are half as good, you have a great thing going here. Diane Dallas, TX

• LogicPro

Satisfied Customers:

4925
Expert in Java C++ C C# VB Javascript Design SQL HTML
< Last | Next >

LogicPro

Satisfied Customers:

4925
Expert in Java C++ C C# VB Javascript Design SQL HTML

Manal Elkhoshkhany

Satisfied Customers:

4538
More than 5000 online tutoring sessions.

Linda_us

Satisfied Customers:

3138
Post Graduate Diploma in Management (MBA)

Chris M.

Satisfied Customers:

2602
Master's Degree, strong math and writing skills, experience in one-on-one tutoring (college English)

F. Naz

Satisfied Customers:

2126
Experience with chartered accountancy

Bizhelp

Satisfied Customers:

1887
Bachelors Degree and CPA with Accounting work experience