Correct solution McDonald's major distribution partner, The Martin-Brower Company, needs at least $1 million to build a new warehouse in Medicine Hat 2 years from today. To date, ithas invested $540,000.00. If it continues to invest $49,000.00 at the end of every quarter into a fund earning 5% quarterly, will it have enough money to build thewarehouse 2 years from now? How much money will it have?The Martin-Brower Company's $540,000.00 will have grown toenough money 2 years from now.and its $49,000.00 deposits will have grown tofor a total ofThus, it ?have

Future value refers to the value of an investment, asset, or cash flow at a specified date in the…

Answered: McDonald's major distribution partner,…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 40P

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A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment of $412,000, and the store expects a return of $100,000 in year one, $72000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period?
A restaurant is considering the purchase of new tables and chairs for their dining room with an initial investment cost of $515,000, and the restaurant expects an annual net cash flow of $103,000 per year. What is the payback period?
Each of the following scenarios is independent. All cash flows are after-tax cash flows. Required: 1. Patz Corporation is considering the purchase of a computer-aided manufacturing system. The cash benefits will be 800,000 per year. The system costs 4,000,000 and will last eight years. Compute the NPV assuming a discount rate of 10 percent. Should the company buy the new system? 2. Sterling Wetzel has just invested 270,000 in a restaurant specializing in German food. He expects to receive 43,470 per year for the next eight years. His cost of capital is 5.5 percent. Compute the internal rate of return. Did Sterling make a good decision?
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
McDonald's major distribution partner, The Martin-Brower Company, needs at least $1 million to build a new warehouse in Medicine Hat 2 years from today. To date, it has invested $450,000.00. If it continues to invest $48,000.00 at the end of every quarter into a fund earning 5% quarterly, will it have enough money to build the warehouse 2 years from now? How much money will it have? The Martin-Brower Company's $450,000.00 will have grown to and its $48,000.00 deposits will have grown to , for a total of Thus, it ? v have enough money 2 years from now.
McDonald's major distribution partner, The Martin-Brower Company, needs at least $1 million to build a new warehouse in Medicine Hat 2 years from today. To date, it has invested $500,000.00. If it continues to invest $46,000.00 at the end of every quarter into a fund earning 6% quarterly, will it have enough money to build the warehouse 2 years from now? How much money will it have? The Martin-Brower Company's $500,000.00 will have grown to and its $46,000.00 deposits will have grown Thus, it ? ✓ have enough money 2 years from now. to for a total of
McDonald's major distribution partner, The Martin-Brower Company, needs at least $1 million to build a new warehouse in Medicine Hat two years from today. To date, it has invested $500,000. If it continues to invest $50,000 at the end of every quarter into a fund earning 6% quarterly, will it have enough money to build the warehouse two years from now?
A supplier of certain suspension system parts for General Motors wants to have a contingency fund that it can draw on during down periods of the economy. The company wants to have $15 million in the fund 5 years from now. If the company deposits $1.5 million now, determine the uniform amount to add at the end of each of the next 5 years to reach its goal, provided the fund earns 10% per year. Solve using (a) tabulated factors, and (b) the Goal Seek tool in Excel.
An engineering school has just completed a new engineering complex worth $50 million. A campaign targeting alumni is planned to raise funds for future maintenance costs. which are estimated at $2 million per year. Any unforeseen costs above $2 million per year would be obtained by raising tuition. Assuming that the school can create a trust fund that earns 8% interest annually. how much has to be raised now to cover the perpetual string of $2 million annual costs?
Consider a project to supply 103 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $1,720,000 five years ago; if the land were sold today, it would net you $1,795,000 aftertax. The land can be sold for $1,751,000 after taxes in five years. You will need to install $5.5 million in new manufacturing plant and equipment to actually produce the stamps; this plant and equipment will be depreciated straight-line to zero over the project’s five-year life. The equipment can be sold for $670,000 at the end of the project. You will also need $590,000 in initial net working capital for the project, and an additional investment of $53,000 in every year thereafter. Your production costs are .51 cents per stamp, and you have fixed costs of $1,080,000 per year. If your tax rate is 24 percent and your required return on this project is 9 percent, what bid price should you submit on the contract?
Consider a project to supply 103 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $1,720,000 five years ago; if the land were sold today, it would net you $1,795,000 aftertax. The land can be sold for $1,751,000 after taxes in five years. You will need to install $5.5 million in new manufacturing plant and equipment to actually produce the stamps; this plant and equipment will be depreciated straight-line to zero over the project's five-year life. The equipment can be sold for $670,000 at the end of the project. You will also need $590,000 in initial net working capital for the project, and an additional investment of $53,000 in every year thereafter. Your production costs are .51 cents per stamp, and you have fixed costs of $1,080,000 per year. If your tax rate is 24 percent and your required return on this project is 9 percent, what bid price should you submit on the contract? (Do not round…

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