EFN406 Managerial Finance Assignment Help and Solution -

Assignment Detail:- EFN406 Managerial Finance Assignment - Queensland University of Technology Capital Budgeting Questions - Calculations must be done in Excel- Question 1 - As the financial advisor to Glamour Car Rentals you are evaluating the following types of cars to add to the fleet: -Coolster - A spoils car with a cost of $150,000 and a useful life of 3 years- It will produce rental income of $110,000 per year and operating costs of $20,000 per year- A major service is required after 2 years costing $15,000- A salvage value of $40,000 is expected after 3 years- The required return is 10%- -Muncher - A four-wheel drive vehicle costing $250,000 but with an expected useful life of 5 years- It will produce rental income of $140,000 per year and operating costs of $30,000 per year- A major service is required after 3 years costing $20,000- A salvage value of $50,000 is expected after 5 years- The required rate of return is 13%- Income tax can be ignored- Required - -1- Calculate the NPV's of the two cars- -2- An analysis of the two cars assuming they are mutually exclusive and can be repeated indefinitely- Question 2 - As the financial advisor to All Star Manufacturing you are evaluating the following new investment in a manufacturing project: The project has a useful life of 8 years- Land costs $10m and is estimated to have a resale value of $15m at the completion of the project- Buildings cost $12m, with allowable depreciation of 6% pa reducing balance and a salvage value of $10m- Equipment costs $5m, with allowable depreciation of 10% pa reducing balance and a salvage value of $1m An investment allowance of 20% of the equipment cost is available- Revenues are expected to be $15m in year one and rise at 5% pa- Cash variable costs are estimated at 30% of revenue- Cash fixed costs are estimated at $3m pa- Managerial salaries of $800,000 will be allocated to the project, but these managerial positions will be unaffected by the acceptance of the project- An amount of $200-000 has been spent on a feasibility study for the new project- The project is to be partially financed with a loan of $13-5m to be repaid annually with equal instalments at a rate of 5% pa over 8 years- Except for initial outlays, assume cash flows occur at the end of each year- The tax rate is 30% and is payable in the year in which profit is earned- The after-tax required return for the project is 11% pa- Required - -a- Calculate the NPV- Is the project acceptable???? Why or why not???? -b- Conduct a sensitivity analysis showing how sensitive the project is to revenues, fixed costs and to the required rate of return- Explain your results-




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