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Finance Students' Assignment

This document contains instructions for an individual assignment in financial management. It includes: 1) A case study on a new product line being considered by Briarcliff Stove Company requiring an initial $700,000 investment and $1 million investment in year 1, with expected after-tax cash inflows provided for years 2 through 10. 2) Questions asking to calculate the net present value at 15% required return, internal rate of return, impact of 10% required return, and payback period for the project. 3) A note to refer to Chapter 4 for capital budgeting techniques. The assignment must be submitted before June 15th in Microsoft Word format.

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1K views2 pages

Finance Students' Assignment

This document contains instructions for an individual assignment in financial management. It includes: 1) A case study on a new product line being considered by Briarcliff Stove Company requiring an initial $700,000 investment and $1 million investment in year 1, with expected after-tax cash inflows provided for years 2 through 10. 2) Questions asking to calculate the net present value at 15% required return, internal rate of return, impact of 10% required return, and payback period for the project. 3) A note to refer to Chapter 4 for capital budgeting techniques. The assignment must be submitted before June 15th in Microsoft Word format.

Uploaded by

SELAM A
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Financial Management

Individual Assignment 1

Submission date: June 15, 2020

Using the following e-mail address: [email protected]

Note:

• The answer must be submitted in Microsoft word format

• Submission before or after June 15 is not acceptable

• You must have your on say on the analysis (case 1) and capital budgeting

techniques (case 2).

Case 1
Note: Refer chapter 2
Case 2

Briarcliff Stove Company is considering a new product line to supplement its range line. It is

anticipated that the new product line will involve cash investment of $700,000 at time 0

and $1.0 million in year 1. After-tax cash inflows of $250,000 are expected in year 2,

$300,000 in year 3, $350,000 in year 4, and $400,000 each year thereafter through

year 10. Though the product line might be viable after year 10, the company prefers to be

conservative and end all calculations at that time.

a) If the required rate of return is 15 percent, what is the net present value of the

project? Is it acceptable?

b) What is its internal rate of return?

c) What would be the case if the required rate of return was 10 percent?

d) What is the project’s payback period?

e) Comment on the alternative methods

Note: Refer chapter 4

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