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Other Fields Homework Help Finance Topic started by: toripollard8 on Jul 7, 2019



Title: Panjandrum Industries, a manufacturer of industrial piping, is evaluating whether it should expand
Post by: toripollard8 on Jul 7, 2019
Use the table for the question(s) below.

Year 0Years 1 to 10
Revenues3.50
-Manufacturing Expenses-0.5
-Marketing Expenses-0.25
-Depreciation-0.8
=EBIT1.95
-Taxes (40%)-0.78
=Unlevered net income1.17
+Depreciation+0.8
-Additions to Net Working Capital-0.2
-Capital Expenditures-8.00
=Free Cash Flow1.77


Panjandrum Industries, a manufacturer of industrial piping, is evaluating whether it should expand into the sale of plastic fittings for home garden sprinkler systems. It has made the above estimates of free cash flows resulting from such a decision. There are concerns of the sensitivity of this project to changes in the cost of capital. For what cost of capital does this project break-even?

▸ 18%

▸ 16%

▸ 14%

▸ 12%


Title: Re: Panjandrum Industries, a manufacturer of industrial piping, is evaluating whether it should expand
Post by: Nashua on Jul 7, 2019
Content hidden


Title: Re: Panjandrum Industries, a manufacturer of industrial piping, is evaluating whether it should expand
Post by: D-john on Jul 7, 2019
Use the table for the question(s) below.

Year 0Years 1 to 10
Revenues3.50
-Manufacturing Expenses-0.5
-Marketing Expenses-0.25
-Depreciation-0.8
=EBIT1.95
-Taxes (40%)-0.78
=Unlevered net income1.17
+Depreciation+0.8
-Additions to Net Working Capital-0.2
-Capital Expenditures-8.00
=Free Cash Flow1.77


Panjandrum Industries, a manufacturer of industrial piping, is evaluating whether it should expand into the sale of plastic fittings for home garden sprinkler systems. It has made the above estimates of free cash flows resulting from such a decision (all quantities in millions of dollars). There are some concerns that estimates of manufacturing expenses may be low, due to the rising cost of raw materials. What is the break-even point for manufacturing expenses, if all other estimates are correct and the cost of capital is 10%?

▸ $1.22 million

▸ $0.78 million

▸ $0.88 million

▸ $0.97 million


Title: Re: Panjandrum Industries, a manufacturer of industrial piping, is evaluating whether it should expand
Post by: Woo on Jul 7, 2019
$0.78 million


Title: Re: Panjandrum Industries, a manufacturer of industrial piping, is evaluating whether it should expand
Post by: D-john on Jul 7, 2019
This calls for a celebration :raised_hands:


Title: Re: Panjandrum Industries, a manufacturer of industrial piping, is evaluating whether it should expand
Post by: david fabos on Jul 7, 2019
Use the table for the question(s) below.

Year 0Years 1 to 10
Revenues3.50
-Manufacturing Expenses-0.5
-Marketing Expenses-0.25
-Depreciation-0.8
=EBIT1.95
-Taxes (40%)-0.78
=Unlevered net income1.17
+Depreciation+0.8
-Additions to Net Working Capital-0.2
-Capital Expenditures-8.00
=Free Cash Flow1.77


Panjandrum Industries, a manufacturer of industrial piping, is evaluating whether it should expand into the sale of plastic fittings for home garden sprinkler systems. It has made the above estimates of free cash flows resulting from such a decision (all quantities in millions of dollars).  It is thought that if marketing expenses are increased by 40%, then revenues will rise. By how much will revenues have to rise for the net present value (NPV) of the project to increase?

▸ at least 3.2%

▸ at least 2.9%

▸ at least 3.8%

▸ at least 2.0%


Title: Re: Panjandrum Industries, a manufacturer of industrial piping, is evaluating whether it should expand
Post by: Dogggg on Jul 7, 2019
at least 2.9%