Problem 10.14 Briarcrest Condiments is a spice-making firm.
Recently, it developed a new process for producing spices. The
process requires...

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 $2,111,359. have a
life of five years, and would produce the cash flows shown in the
following table. Year Cash Flow 1 $602,952 2 -287,525 3 933,809 4
998,838 5 771,435

What is the NPV if the discount rate is 12.91 percent? (Enter
negative amounts using negative sign e.g. -45.25. Round answer to 2
decimal places, e.g. 15.25.) NPV is $

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 $11.80 million. This
investment will consist of $2.90 million for land and $8.90 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 $5.24 million, $2.50 million above book value. The farm is
expected to produce revenue of $2.02 million each year, and annual
cash flow from operations equals $1.82 million. The marginal tax
rate is 35 percent, and the appropriate discount rate is 9 percent.
Calculate the NPV of this investment. (Round intermediate
calculations and final answer to 2 decimal places, e.g. 15.25.) NPV
$

The project should be

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 13.0 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 4,450 7,000 2 3,900 7,000 3 3,350
7,000 4 2,800 7,000 5 2,250 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: NPV0 = $ NPV1 = $ NPV2 = $ NPV3 = $ NPV4 = $ NPV5 =
$ Suggest when should Bell Mountain buy the new accounting system?
Bell Mountain should purchase the system in .

Problem 12.24 Chip’s Home Brew Whiskey management forecasts
that if the firm sells each bottle of Snake-Bite for $20, then the
demand for the product will be 15,000 bottles per year, whereas
sales will be 84 percent as high if the price is raised 18 percent.
Chip’s variable cost per bottle is $10, and the total fixed cash
cost for the year is $100,000. Depreciation and amortization
charges are $20,000, and the firm has a 30 percent marginal tax
rate. Management anticipates an increased working capital need of
$3,000 for the year. What will be the effect of the price increase
on the firm’s FCF for the year? (Round answers to nearest whole
dollar, e.g. 5,275.) At $20 per bottle the Chip’s FCF is $ and at
the new price Chip’s FCF is $ .

Problem 13.11 Capital Co. has a capital structure, based on
current market values, that consists of 42 percent debt, 12 percent
preferred stock, and 46 percent common stock. If the returns
required by investors are 9 percent, 11 percent, and 19 percent for
the debt, preferred stock, and common stock, respectively, what is
Capital’s after-tax WACC? Assume that the firm’s marginal tax rate
is 40 percent. (Round intermediate calculations to 4 decimal
places, e.g. 1.2514 and final answer to 2 decimal places, e.g.
15.25%.) After tax WACC = %

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