# Finance calculation problems 2

**Question description**

1. Briarcrest Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires new machinery that would cost $1,481,259. have a life of five years, and would produce the cash flows shown in the following table.

Year | Cash Flow |
---|---|

1 | $574,354 |

2 | -267,265 |

3 | 748,090 |

4 | 737,639 |

5 | 838,637 |

What is the NPV if the discount rate is 14.45 percent?

*(Enter negative amounts using negative sign e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25.)*NPV is |

*(Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.)*NPV |

The project should be | accepted or rejectedacceptedrejected | . |

Year | Cost | Value of Future Savings (at time of purchase) |
---|---|---|

0 | $5,000 | $7,000 |

1 | 4,400 | 7,000 |

2 | 3,800 | 7,000 |

3 | 3,200 | 7,000 |

4 | 2,600 | 7,000 |

5 | 2,000 | 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:

NPV_{0} = $

NPV_{1} = $

NPV_{2} = $

NPV_{3} = $

NPV_{4} = $

NPV_{5} = $

Bell Mountain should purchase the system in year 1 or 2 or 3 or 4 or 5 |

*(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 $ |

*(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 | = | % |

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