Calculate the NPV of the proposed investment, using the inputs suggested in this case. How sensitive is this NPV to future sales volume? *The answer is 15.7 million; please show me the work.
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Calculate the NPV of the proposed investment, using the inputs suggested in this case. How sensitive is this NPV to future sales volume? *The answer is 15.7 million; please show me the work.
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- International energy drink giant Energica America's regional sales manager Will Smith investigate the plans for the Middle East and plans to launch in Azerbaijan in 2021. The market price of the Company's plant in America is determined to be $ 5 million. It causes the company to need a capital of $ 20 million in 2021 to shift the investment to Azerbaijan and to establish a new bottling factory and distribution channel. While the fixed expenses required for production, distribution and marketing as of 2021 are $ 3 million per year, 50 million liters of energy drink will be produced in the country at the end of each year. Variable costs arising from production and distribution will be 12 Cent per liter. According to the policy pursued, the expected minimum return rate of the company is accepted as 6%. The income from sales is expected to be 35 cents per liter. Bottling factories are expected to serve almost forever, so all unit costs and sales revenues are expected to remain constant…OpenDoor Cafe is considering opening a new food court in a major US city. The initial investment is expected to be $ 12,550,000. The projected cash flows are $4, 955,000 in years one and two, $2, 185,000 in year three, $2,715,000 in year four, and $3,040,000 on year five. What is this project's internal rate of return? Group of answer choices 6.70% 17.26 % 11.28% 15.02%Micheal’s Machinery is a German multinational manufacturing company. Currently, Micheal’s financial planners are considering undertaking a 1-year project in the United States. The project's expected dollar-denominated cash flows consist of an initial investment of $2000 and a cash inflow the following year of $2400. Micheal’s estimates that its risk-adjusted cost of capital is 12%. Currently, 1 U.S. dollar will buy 0.7 Germany. In addition, 1-year risk-free securities in the United States are yielding 6.5%, while similar securities in Germany’s are yielding 4.5%. If this project was instead undertaken by a similar U.S.-based company with the same risk-adjusted cost of capital, what would be the net present value and rate of return generated by this project? Round your answers to two decimal places. What is the expected forward exchange rate 1 year from now? Round your answer to two decimal places. If Micheal undertakes the project, what is the net present value and rate of return of…
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- Suppose the multinational Milton Asset Extraction (MAX) is considering an overseas project in a country with substantial political risk. MAX predicts that the project will yield USD100 million each year for two years. The initial cost of the project is USD145 million. In any given year there is a 13% chance that the project will be expropriated by the host country’s government. The discount rate for the project is 8%. Calculate the expected net presentThe Houston American Cement factory will require an investment of $200 million to construct. Delays beyond the anticipated implementation year of 2012 will require additional money to construct the factory. Assuming that the cost of money is 10% per year, compound interest. Determine the following for the board of directors of the Brazilian company that plans to develop the plant. (a) The equivalent investment needed if the plant is built in 2015. (b) The equivalent investment needed had the plant been constructed in the year 2008.Suppose you are the financial manager of a large national food processing firm. In your travels, you run across a small regional food processor that you believe will provide your firm with annual returns of over 30%. Returns on your firm’s typical investments are around 20%. Should you propose that your firm acquire this regional food processor? What factors need to be considered in this decision?
- Carpet Baggers, Incorporated, is proposing to construct a new bagging plant in a country in Europe. The two prime candidates are Germany and Switzerland. The forecasted cash flows from the proposed plants are as follows: Candidates Germany (millions of euros) Switzerland (millions of Swiss francs) -63 -106 C1 +13 +23 a. Net present value b. Net present value c. Should the company go ahead with either project? d. If it must choose between them, which should it take? C₂ +18 +33 C3 +18 +33 Yes Swiss plant C4 +23 +38 C5 +23 +38 The spot exchange rate for euros is EUR/USD = 1.33, while the rate for Swiss francs is USD/CHF = 1.53. The interest rate is 4% in the United States, 3% in Switzerland, and 5% in the euro countries. The financial manager has suggested that, if the cash flows were stated in dollars, a return in excess of 9% would be acceptable. million million C6 +23 +38 a. Calculate the NPV in dollars for the German plant. Note: Do not round intermediate calculations. Enter your…I need assistance on Identifying each of the following as either capital budgeting (investment) or financing decisions and an explanation on why? Intel decides to spend $1 billion to develop a new microprocessor. Volkswagen borrows 350 million euros from Deutsche Bank. Royal Dutch Shell constructs a pipeline to bring natural gas onshore from a production platform in Australia. Avon spends 200 million euros to launch a new range of cosmetics in European markets. Pfizer issues new shares to buy a small biotech company.The CFO of Expansion Group Ltd. has been presented with an opportunity to undertake a 7-year project in Turkey. As an emerging market, some incentives are available for foreign direct investment (FDI) in the country and she would like to evaluate this proposal.The following data is available for the evaluation of the project: The project investment is expected to cost £3,500,000, payable at the start of the project. Of this amount, £3,000,000 is a capital investment, with the remainder required for set up costs and other project related expenses. (Ignore depreciation for the purpose of this exercise.)The after-tax cash inflows have been estimated at £800,000 per year for the duration of the project. An opportunity cost of expansion in the UK has been identified and valued at £725,000.Costs for a visit to Turkey to evaluate the location and for meetings with the Turkish investment authority (ISPAT) have been recorded as £50,000.The company is publicly traded and the βeta of its stock is…