FIN 571 Week 6 WileyPLUS Assignment NEW - 100% Correct With Workings

Question 1

FIN 571 Week 6 WileyPLUS Assignment NEW

http://www.assignmentcloud.com/FIN-571-NEW/FIN-571-Week-6-WileyPLUS-Assignment-NEW

Complete the following in WileyPLUS:

• Problem 10.14

Briarcrest Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires new machinery that would cost $1,968,450. have a life of five years, and would produce the cash flows shown in the following table.

Year    Cash Flow
1          $512,496
2          -242,637
3           814,558
4           887,225
5           712,642

What is the NPV if the discount rate is 15.9 percent? (Enter negative amounts using negative sign e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25.)

• Problem 11.20

Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $12.00 million. This investment will consist of $2.00 million for land and $10.00 million for trucks and other equipment. The land, all trucks, and all other equipment is expected to be sold at the end of 10 years at a price of $5.00 million, $2.00 million above book value. The farm is expected to produce revenue of $2.00 million each year, and annual cash flow from operations equals $1.80 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 10 percent. Calculate the NPV of this investment. (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.)

• Problem 11.24

Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money, the cost of the system continues to decline. The Bell Mountain’s opportunity cost of capital is 10 percent, and the costs and values of investments made at different times in the future are as follows:
Year    Cost    Value of Future Savings
(at time of purchase)
0    $5,000    $7,000    
1    4,500    7,000    
2    4,000    7,000    
3    3,600    7,000    
4    3,300    7,000    
5    3,100    7,000    
Calculate the NPV of each choice. (Round answers to the nearest whole dollar, e.g. 5,275.)
The NPV of each choice is:

Answer 1

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