Sunland, Inc., is considering investing in a new production line for eye drops. Other than investing in the equipment, the company needs to increase its cash and cash equivalents by $10,000, increase the level of inventory by $27,000, increase accounts receivable by $25,000, and increase accounts payable by $5,000 at the beginning of the project. Sunland will recover these changes in working capital at the end of the project 8 years later. Assume the appropriate discount rate is 9 percent. What are the present values of the relevant investment cash flows? (Do not round intermediate calculations. Round answer to 2 decimal places, e.g. 15.25.)Present value$enter the Present value in dollars rounded to 2 decimal places Save for LaterAttempts: unlimitedSubmit Answer 3. Given the soaring price of gasoline, Ford is considering introducing a new production line of gas-electric hybrid sedans. The expected annual unit sales of the hybrid cars is 22,000; the price is $26,000 per car. Variable costs of production are $14,000 per car. The fixed overhead including salary of top executives is $80 million per year. However, the introduction of the hybrid sedan will decrease Ford’s sales of regular sedans by 9,000 cars per year; the regular sedans have a unit price of $20,000, a unit variable cost of $12,000, and fixed costs of $250,000 per year. Depreciation costs of the production plant are $46,000 per year. The marginal tax rate is 40 percent. What is the incremental annual cash flow from operations?Incremental annual cash flow from operations$enter the Incremental annual cash flow from operations in dollars Save for LaterAttempts: unlimited4. Sheridan Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $12.10 million. This investment will consist of $2.10 million for land and $10.00 million for trucks and other equipment. The land, all trucks, and all other equipment are expected to be sold at the end of 10 years for a price of $5.25 million, which is $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 $1.90 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 10 percent. Calculate the NPV of this investment. (Do not round factor values. Round final answer to 2 decimal places, e.g. 15.25.)NPV$enter the NPV in dollars rounded to 2 decimal places The project should beselect an option .Save for LaterAttempts: unlimitedSubmit Answer 5. Oriole, Inc., is launching a new store in a shopping mall in Houston. The annual revenue of the store depends on the weather conditions in the summer in Houston. The annual revenue will be $248,100 in a sizzling summer, with a probability of 0.3, $85,500 in a cool summer with a probability of 0.2, and $135,000 in a normal summer with a probability of 0.5.What is the expected annual revenue for the store?Expected annual revenue$enter the Expected annual revenue in dollars 6. Sunland Manufacturing Company currently owns a mine that is known to contain a certain amount of gold. Since Sunland does not have any gold-mining expertise, the company plans to sell the entire mine and base the selling price on a fixed multiple of the spot price for gold at the time of the sale. Analysts at Sunland have forecast the spot price for gold and have determined that the price will increase by 13 percent, 11 percent, 7 percent, and 4 percent during the next one, two, three, and four years, respectively. If Sunland’s opportunity cost of capital is 10 percent, what is the optimal time for Sunland to sell the mine?Sunland should sell the mine at the end of year Choose your answer here .Save for LaterAttempts: unlimitedSubmit Answer 7. ou are considering opening another restaurant in the TexasBurgers chain. The new restaurant will have annual revenue of $355,200 and operating expenses of $177,600. The annual depreciation and amortization for the assets used in the restaurant will equal $59,200. An annual capital expenditure of $10,000 will be required to offset wear-and-tear on the assets used in the restaurant, but no additions to working capital will be required. The marginal tax rate will be 40 percent.Calculate the incremental annual after-tax free cash flow for the project.Incremental annual after-tax free cash flow$enter the Incremental annual after-tax free cash flow in dollars 8. Ivanhoe Manufacturing, Inc., needs to purchase a new central air-conditioning system for a plant. There are two choices. The first system costs $64,000 and is expected to last 10 years, and the second system costs $78,000 and is expected to last 15 years. Assume that the opportunity cost of capital is 10 percent. (Round answers to 2 decimal places, e.g. 5,275.25.) System 1System 2Equivalent annual cost$enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places Which air-conditioning system should Ivanhoe purchase?Ivanhoe should purchase the select a system .Save for Later 9. Current Attempt in ProgressAfter estimating a project’s NPV, the analyst is advised that the fixed capital outlay will be revised upward by $73200. The fixed capital outlay is depreciated straight-line over a 6-year life. The tax rate is 40 percent, and the required rate of return is 11 percent. No changes in cash operating revenues, cash operating expenses, or salvage value are expected. What is the effect on the project NPV?$73200 decrease.$52555 decrease.$42232 decrease.No change.
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