Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. glassworks inc. has developed a new vase. it can g

GlassWorks Inc. has developed a new vase. It can go into production for an initial...

90.2K

Verified Solution

Question

Finance

image
GlassWorks Inc. has developed a new vase. It can go into production for an initial investment in equipment of $6.0 million. The equipment will be depreciated straight-line over 6 years, but, in fact, it can be sold after 6 years for $530,000. The firm believes that working capital at each date must be maintained at a level of 15% of next year's forecast sales. The firm estimates production costs equal to $190 per vase and believes that the vases can be sold for $6 each. Sales forecasts are given in the following table. The project will come to an end in 6 years, when the vase becomes technologically obsolete. The firm's tax bracket is 40%, and the required rate of return on the project is 9% Year Thereafter Sales (millions of vases) 0.4 0.5 0.6 0.6 0.8 0.4 0 0 0 5 6 Suppose the firm can cut its requirements for working capital in half by using better inventory control systems. By how much will this increase project NPV? (Do not round your intermediate calculations. Enter your answer in millions rounded to 4 decimal places.) Change in NPV mon

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

I have been given a project to do that will have the potential of being implemented....

Electrical Engineering
Q

Snell’s law applies to all waves, not just light. The general form is sin(?1) /?1 =...

Physics
Q

What is strategy implementation? What questions must strategy makers consider to begin the implementation process?

General Management
Q

Compare and contrast the difference between variable and full costing. Describe why income calculated under full absorption...

Accounting
Q

A train is approaching a stationary with sounding a whistle Then the observer hears the...

Physics
Q

46 sin 2

Calculus
Q

A machine costing $212,400 with a four-year life and an estimated $18,000 salvage value is...

Accounting
Q

vork Required Questi Units sold * Hollywood Cosmetics manufactures and sells a face cream to...

Accounting
Q

Saby Corporation's break-even-point in sales is $820,000, and its variable expenses are 80% of sales....

Accounting
Q

highlight one advantage and one disadvantage of market based transfer pricing method

Accounting
Q

How could stock based compensation casue management to make decisions not in line with shareholder...

Accounting
Q

. . Assume the following budgeted information for a merchandising company Budgeted sales (all on...

Accounting