Briarcrest Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires new machinery that would cost $2,309,189. have a life of five years, and would produce the cash flows shown in the following tabl

      Briarcrest Condiments is a spice-making   firm. Recently, it developed a new process for producing spices. The process   requires new machinery that would cost $2,309,189. have a life of five years,   and would produce the cash flows shown in the following table.                                Year   Cash Flow                                                 1 $484,309                                                  2 -290,218                                                  3 849,177                                                  4 1,048,611                                                  5 766,304                                                                                                    What   is the NPV if the discount rate is 12.47 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 $12.10   million. This investment will consist of $2.30 million for land and $9.80   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 $5.29   million, $2.30 million above book value. The farm is expected to produce   revenue of $2.06 million each year, and annual cash flow from operations   equals $1.90 million. The marginal tax rate is 35 percent, and the   appropriate discount rate is 10 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 15.3 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   4,700 7,000                                                 2   4,400 7,000                                                 3   4,100 7,000                                                 4   3,800 7,000                                                 5   3,500 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   37 percent debt, 16 percent preferred stock, and 47 percent common stock. If   the returns required by investors are 11 percent, 11 percent, and 15 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 =                                                 %                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Briarcrest Condiments is a spice-making   firm. Recently, it developed a new process for producing spices. The process   requires new machinery that would cost $2,309,189. have a life of five years,   and would produce the cash flows shown in the following table.                                Year   Cash Flow                                                 1 $484,309                                                  2 -290,218                                                  3 849,177                                                  4 1,048,611                                                  5 766,304                                                                                                    What   is the NPV if the discount rate is 12.47 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 $12.10   million. This investment will consist of $2.30 million for land and $9.80   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 $5.29   million, $2.30 million above book value. The farm is expected to produce   revenue of $2.06 million each year, and annual cash flow from operations   equals $1.90 million. The marginal tax rate is 35 percent, and the   appropriate discount rate is 10 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 15.3 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   4,700 7,000                                                 2   4,400 7,000                                                 3   4,100 7,000                                                 4   3,800 7,000                                                 5   3,500 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   37 percent debt, 16 percent preferred stock, and 47 percent common stock. If   the returns required by investors are 11 percent, 11 percent, and 15 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 =                                                 %