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years. The loan is amortized into three equal, annual, end-of-year
payments.
6) NPV Calculate the net present value (NPV) for a 30-year project with
an initial investment of $ 0 and a cash inflow of $2,000 per year.
Assume that the firm has an opportunity cost of 17%. Comment on the
acceptability of the project.
7) Scenario Analysis Automated Food Distribution Corp. (AFDC)
produces vending machines and places them in public buildings. The
company has obtained permission to place one of its machine in a local
library. The company makes two types of machines. One distributes soft
drinks, and the other distributes snack foods. AFDC expects both
machines to provide benefits over a 8-year period, and each has a
required investment of $2,990. The firm uses a 9.8% cost of capital.
Management has constructed the following table of estimates of annual
cash inflows for pessimistic., most likely, and optimistic results.
8) Degree of operating leverage Grey Products has fixed operating costs
of $382,000, varaiable operating costs of $15.61 per unit, and selling
price of $62.91 per unit.
9) Finding operating and free cash flows consider the balance sheets
and selected data from the income statement of Keith Corporation.
10) Pro forma balance sheet – Basic Leonard Industries wishes to
prepare a pro forma balance sheet for December 31,2016. The firm
expects 2016 sales to total $3,000,000.
11) Aggressive versus conservative seasonal funding strategy Dynabase
Tool has forecast its total funding requirements for the coming year.