This topic contains a solution. Click here to go to the answer

Author Question: Tom Morrison Inc., a leading manufacturer of golf equipment, is currently evaluating a new golf ball ... (Read 35 times)

ARLKQ

  • Hero Member
  • *****
  • Posts: 571
Tom Morrison Inc., a leading manufacturer of golf equipment, is currently evaluating a new golf ball called the 'Feathery'. The secret to the Feathery is that its core is made from goose down. The advantage of down is that the ball flies higher and longer. You have been asked to analyze The Feathery project and present your findings to the company's executive committee. 
The production line would be set up in an unused section of Morrison's main plant. The machinery is estimated at $480,000. Further, Morrison's inventories would have to be increased by $50,000 to handle the new line. The machinery is depreciated using MACRS with a 7-year recovery period. The machinery will be used for 2 years and have an expected salvage value of $200,000 at the end of that time. Morrison's tax rate is 30% and its weighted average cost of capital is 10%. 
Operating earnings (EBITDA) are expected to be $330,000 per year for each of the two 2 years. Assume that the purchase of the machine and increase in inventory occur at the beginning of the first year of operations. Assume that operating cash flows occur at the end of each of the two years of operations. What is the NPV for the proposed acquisition if the cost of capital is 10%? 

MACRS Depreciation Rates
Year5-Year7-Year
120.00%14.29%
232.00%24.49%
319.20%17.49%

◦ $107,320
◦ $119,894
◦ $125,373
◦ $148,643
◦ $157,320


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by ARLKQ on Apr 25, 2021

chereeb

  • Sr. Member
  • ****
  • Posts: 326
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
Answer Preview
Only 29% of students answer this correctly




ARLKQ

  • Member
  • Posts: 571
Reply 2 on: Apr 25, 2021
Thanks for the timely response, appreciate it


Viet Thy

  • Member
  • Posts: 329
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

 

Did you know?

It is difficult to obtain enough calcium without consuming milk or other dairy foods.

Did you know?

Always store hazardous household chemicals in their original containers out of reach of children. These include bleach, paint, strippers and products containing turpentine, garden chemicals, oven cleaners, fondue fuels, nail polish, and nail polish remover.

Did you know?

The human body's pharmacokinetics are quite varied. Our hair holds onto drugs longer than our urine, blood, or saliva. For example, alcohol can be detected in the hair for up to 90 days after it was consumed. The same is true for marijuana, cocaine, ecstasy, heroin, methamphetamine, and nicotine.

Did you know?

Stroke kills people from all ethnic backgrounds, but the people at highest risk for fatal strokes are: black men, black women, Asian men, white men, and white women.

Did you know?

Asthma is the most common chronic childhood disease in the world. Most children who develop asthma have symptoms before they are 5 years old.

For a complete list of videos, visit our video library