Question

How to calculate the estimated value of the company in the project part

Answer #1

Valuation of a company is the process of determining the true worth of a company.

We can determine the value of the company by the following methods

- NAV i.e. Net Asset Value Method which is total assets - total external liability

- Market Value Added which is current value of the securities of the company - value of shareholder's fund

- Value of company using future maintainable profits

- Value of the firm by using discounted cash flow model

- Value of the company using chop shop approach

M11-5 Calculating Net Present Value [LO 11-3]
Citrus Company is considering a project that has estimated
annual net cash flows of $39,405 for five years and is estimated to
cost $185,000. Citrus’s cost of capital is 10 percent.
Determine the net present value of the project. (Future Value of
$1, Present Value of $1, Future Value Annuity of $1, Present Value
Annuity of $1.) (Use appropriate factor(s) from the tables
provided. Negative amount should be indicated by a minus...

Your company is considering two projects and has estimated the
following cash flows:
Year Project A Project B
0 -15,000 -20,000
1 10,000 10,000
2 10,000 18,000
Attempt 1/1 for 10 pts.
Part 1
If project B expands your manufacturing capacity by building a
separate factory, what is the relevant cash flow for evaluating
project B in year 2?
Submit
Attempt 1/1 for 10 pts.
Part 2
If project B replaces an existing factory (project A), what is
the relevant...

Q 1. From the following information, calculate
the net present value of the two project and suggest which of the
two projects should be accepted.
Particulars
Project X
Project Y
Investment
400,000 dhs
420,000 dhs
Estimated Life
4 years
4 years
Scrap Value
60,000 dhs
70,000 dhs
The cash inflows are as follows:
Project Name
Year 1
Year 2
Year 3
Year 4
Project X
90,000
120,000
140,000
70,000
Project Y
80,000
148,000
98,000
60,000
Note: The following are the...

Calculate the payment and performance bond premium for a
contract for a building project with an estimated cost of $12.5
million. Project duration is estimated at 18 months. If the project
actual cost turns out to be $12.75m (same duration), what is the
adjustment for the premium (how much extra should the contractor
pay the surety)?

A machine that cost $400,000 has an estimated residual value of
$40,000 and an estimated useful life of four years. The company
uses double-declining-balance depreciation. Required:
1. Calculate the machine's depreciable cost.
2. Calculate the machine's depreciation expense for each
year.
3. Calculate the machine's accumulated depreciation and book
value at the end of each year.

A machine that cost $400,000 has an estimated residual value of
$40,000 and an estimated useful life of four years. The company
uses straight-line depreciation. Required:
1. Calculate the machine's depreciable cost.
2. Calculate the amount of depreciation expense that will be
taken on the machine each year.
3. Calculate the machine's accumulated depreciation and book
value at the end of each year.

EF company wishes to assess the value of its AS Devision.
The AS Devision’s estimated free cash flow for shareholders (ECF)
each year 2020 through 2023 is given in the following table. Beyond
2023 to infinity, the firm expects its free cash flow to grow at 3%
annually. The required ate of retyrn by shareholders is equal
12%
year
FCF
2020
700 000
2021
1 200 000
2022
1 100 000
2023
1 200 000
Use the ECF valuation model...

Rock Haven has a proposed project with a 9-year life that is
estimated to bring in sales sales of 8,700 units each year at a
price of $74 per unit. The variable cost is $45 per unit. The fixed
assets required for the project have a cost $301,000. They will be
depreciated on a straight-line basis over the life of the project
with no salvage value. The project has fixed costs estimated to be
$180,000 annually. The tax rate is...

Part A. On January 2, 2019, a machine was
purchased for $180,000. It has an estimated useful life of ten
years and an estimated residual value of $14,000. The company uses
the declining-balance method of depreciation with a declining
balance rate of 20%.
Depreciation expense for 2019 =
$________________________.
Depreciation expense for 2020 =
$_________________________.

You've estimated the following cash flows (in $) for two
mutually exclusive projects:
Year
Project A
Project B
0
-5,600
-8,400
1
1,325
1,325
2
2,148
2,148
3
4,193
8,192
The required return for both projects is 8%.
Part 1 : What is the IRR for project A? 3+ Decimals
Part 2 What is the IRR for project B? 3+ Decimals
Part 3 Which project seems better according to the IRR method?
Project A or Project B
Part 4 What...

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