Briarcrest Condiments is a spice-making firm. Recently it developed a new process for producing spices. The process requires new machinery
that would cost $2419028. have a life of five years and would produce the cash flows shown in the following table.

Year Cash Flow

1 $484872

2 -299244

3 885913

4 1067687

5 559139

What is the NPV if the discount rate is 15.41 percent? (Enter negative amounts using negative sign e.g. -45.25. Round answer to 2
decimal places e.g. 15.25.)

NPV is $ ______

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 $11.90 million. This investment will consist of $2.10 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 $5.20 million $2.24 million above book value. The farm is expected to
produce revenue of $2.10 million each year and annual cash flow from operations equals $1.94 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 accepted or rejected

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%u2019s opportunity cost of capital is 10.9
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 $5000 $7000

1 4700 7000

2 4400 7000

3 4100 7000

4 3800 7000

5 3500 7000

Calculate the NPV of each choice. (Round answers to the nearest whole dollar e.g. 5275.)

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 year1 year 2 year 3 year 4 year 5

Chip%u2019s 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 15000 bottles per year whereas sales will be 88 percent as high if the price is raised 9 percent. Chip%u2019s variable cost per bottle is $10 and
the total fixed cash cost for the year is $100000. Depreciation and amortization charges are $20000 and the firm has a 30 percent marginal tax rate.
Management anticipates an increased working capital need of $3000 for the year. What will be the effect of the price increase on the firm%u2019s FCF for the
year? (Round answers to nearest whole dollar e.g. 5275.)

At $20 per bottle the Chip%u2019s FCF is $ __________ and at the new price Chip%u2019s FCF is $ _______

Capital Co. has a capital structure based on current market values that consists of 37 percent debt 17 percent preferred stock and 46
percent common stock. If the returns required by investors are 9 percent 13 percent and 18 percent for the debt preferred stock and common stock
respectively what is Capital%u2019s after-tax WACC? Assume that the firm%u2019s 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= %