Question

The clothing manufacturer, Twisted Pair, is considering introducing a line of cargo pants made entirely from...

The clothing manufacturer, Twisted Pair, is considering introducing a line of cargo pants made entirely from hemp. The project costs $4.6 million and will generate cash flows of $1 million for 5 years.

If the interest rate is 4% annually, what is the project NPV?

Should the project be accepted? Why or why not?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
​(​NPV, ​PI, and IRR calculations​) Fijisawa Inc. is considering a major expansion of its product line...
​(​NPV, ​PI, and IRR calculations​) Fijisawa Inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial outlay would be ​$2 comma 000 comma 0002,000,000​, and the project would generate incremental free cash flows of ​$600 comma 000600,000 per year for 77 years. The appropriate required rate of return is 66 percent.a. Calculate the NPV. b. Calculate the PI. c. Calculate the IRR. d. Should this project...
McCormick and company is also considering introducing two new product lines to be made at the...
McCormick and company is also considering introducing two new product lines to be made at the new factory (if it is purchased). as a new member of MCS's finance team, you are asked to determine whether McCormick and Company should invest in the two product line expansions. Project A has lower future cash flows than project B, but Project A is more closely related to McCormick's existing product line, the company feels that it is less risky than project B....
Read Book Company is the manufacturer of exercise machines and is considering producing a new line...
Read Book Company is the manufacturer of exercise machines and is considering producing a new line of equipment in an effort to increase its market share.   The new production line will cost $850,000 for manufacturing the parts and an additional $280,000 is needed for installation. The equipment falls into the MACRS 3-yr class, and would be sold after four years for $350,000. The equipment line will generate additional annual revenues of $600,000, and will have additional annual operating expenses of...
Please show how you got all calculations McCormick & Company is also considering introducing two new...
Please show how you got all calculations McCormick & Company is also considering introducing two new product lines to be made at the new factory (if it is purchased). As a new member of MCS's finance team, you are asked to determine whether McCormick & Company should invest in the two product line expansions. Project A has lower future cash flows than Project B, but because Project A is more closely related to McCormick's existing product line, the company feels...
Parker Products manufactures a variety of household products. The company is considering introducing a new detergent....
Parker Products manufactures a variety of household products. The company is considering introducing a new detergent. The company's CFO has collected the following information about the proposed product. (Note: You may or may not need to use all of this information, use only the information that is relevant.) · The project has an anticipated economic life of 4 years. · The company will have to purchase a new machine to produce the detergent. The machine has an up-front cost (t...
Consider a hypothetical economy that has NO tax. ABC Ltd. is considering investing in a 2-year...
Consider a hypothetical economy that has NO tax. ABC Ltd. is considering investing in a 2-year project which is expected to generate the following year-end cash flows: C1 = $110 million, C2 = $115 million. The yearly discount rate for the project is 10%. The initial cost of the project is $200 million. (a) Compute the profit and NPV of the project. (b) Based on the answer of part (a), should the project be accepted? Explain. (c) ABC’s cut-off period...
Apple is considering whether to build the “Global Store” in Federation Square Melbourne today in 2019....
Apple is considering whether to build the “Global Store” in Federation Square Melbourne today in 2019. Apple has already purchased the land on the site and wants to make a decision about whether to build on it. Assume the store will have a life of 20 years and will generate revenues of $32 million per year AUD over the 20 years (with the first cash flow at the end of year 1). By building the store Apple will attract negative...
] Burton, a manufacturer of snowboards, is considering replacing an existing piece of equipment with a...
] Burton, a manufacturer of snowboards, is considering replacing an existing piece of equipment with a more sophisticated machine. The following information is given. • The proposed machine will cost $120,000 and have installation costs of $20,000. It will be depreciated using a 3 year MACRS recovery schedule. It can be sold for $60,000 after three years of use (before tax; at the end of year 3). • The existing machine was purchased two years ago for $95,000 (including installation)....
Carolyn Nesbitt, the CEO of Macrocorp, is considering a project to expand the existing business into...
Carolyn Nesbitt, the CEO of Macrocorp, is considering a project to expand the existing business into a new product line that involves considerable up-front investments in new equipment as well as an initial investment in net operating working capital. Her executives’ cash flow projections are fairly aggressive with $500 M in sales at the end of the first year increasing by 5% annually for the next five years. Cost of goods sold is expected to be $250M in the first...
Anchor Inc. has 1,000 bonds outstanding that are selling for $911.66 each. The bonds carry a...
Anchor Inc. has 1,000 bonds outstanding that are selling for $911.66 each. The bonds carry a 6.0 percent coupon, pay interest semi-annually, and mature in 14 years. The common stock is priced at $40 a share and there are 40,000 shares outstanding. This year, the company paid an annual dividend in the amount of $2.00 per share. The dividend growth rate is estimated to be 5.0 percent indefinitely. The company is considering a project that is equally as risky as...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT