I need some help to solve the Incremental NPV - FMVperformance.com : The site for all your Ford Mazda and Volvo needs
 
LinkBack Thread Tools
post #1 of 3 (permalink) Old 06-25-2009, 10:15 PM Thread Starter
Le Mans: Prototype Class
 
Join Date: Feb 2008
Location: Illinois
Posts: 1,784
Send a message via AIM to roman86s
I need some help to solve the Incremental NPV

Use the following information for #6-8:
You have decided to expand your familyís farm business through the purchase of a new tractor. After an extensive analysis (for which you paid your cousin Bob $19,000 to do), you have settled on the John Deere 8320T. The tractor has a price of $74,000, and will be usable for a five-year period, at which point it will have a $27,000 salvage value. The price includes construction of a new barn to house the tractor, but does not consider the value of land where the barn will be built. The land is already owned by your family. If not used for this project the land will be sold for its market value ($41,000 after taxes and selling costs). If used for the project then the land will be sold at the end of the project for the same price. Purchase of the tractor will require an increase in net working capital of $11,000 now (which will be recaptured at the end of the project). Last year, you paid $51,000 for training for your family to learn how to use this tractor. Because of its increased capabilities, your farm will be able to generate additional before-tax annual revenues of $65,000. However, the tractor will also increase your annual operating costs by $12,500. If you purchase this tractor then you will sell you old tractor now for $10,000, after taxes and selling costs. If you donít buy the new tractor then you will continue to use your old one for the next five years, after which it will be worth nothing. The farm's marginal tax rate is 38 percent, and the annual financing rate offered is 14 percent.


_____8. Suppose now that you are also offered the Kubota 9000, an even bigger tractor. The tractor is similar in all aspects, except its price is $100,000, it will have a salvage value of $30,000, it generates additional before-tax annual revenues of $72,000 and additional before-tax annual expenses of $10,000.
What is the incremental NPV of this tractor?

A. $43,760
B. $7,638
C. $10,638
D. $1,780
E. $18,240
F. None of the above.


To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.

Next: CP-E, Cosworth Mani, RC 440 Injectors
roman86s is offline  
Sponsored Links
Advertisement
 
post #2 of 3 (permalink) Old 06-26-2009, 12:57 AM
Senior Member
 
Join Date: Apr 2006
Location: North Carolina
Posts: 7,672
Send a message via AIM to TEKWATCH Send a message via Yahoo to TEKWATCH
Re: I need some help to solve the Incremental NPV

OMG!!!! This is the crap in high school that made my brain hurt and I would walk out of class, I want no part of this.

Put down G- Who cares & does not matter because the farmer is selling crack on the side and making 1 million extra per year anyways.


To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.

[b]
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.
TEKWATCH is offline  
post #3 of 3 (permalink) Old 06-26-2009, 02:04 AM Thread Starter
Le Mans: Prototype Class
 
Join Date: Feb 2008
Location: Illinois
Posts: 1,784
Send a message via AIM to roman86s
Re: I need some help to solve the Incremental NPV

Well thank you! :P

I got it all done, it was actually "D"


To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.

Next: CP-E, Cosworth Mani, RC 440 Injectors
roman86s is offline  
Sponsored Links
Advertisement
 
Reply

  FMVperformance.com : The site for all your Ford Mazda and Volvo needs > Misc > Lounge

Quick Reply
Message:
Options

Register Now



In order to be able to post messages on the FMVperformance.com : The site for all your Ford Mazda and Volvo needs forums, you must first register.
Please enter your desired user name, your email address and other required details in the form below.

User Name:
Password
Please enter a password for your user account. Note that passwords are case-sensitive.

Password:


Confirm Password:
Email Address
Please enter a valid email address for yourself.

Email Address:
OR

Log-in










Thread Tools
Show Printable Version Show Printable Version
Email this Page Email this Page



Posting Rules  
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On

 
For the best viewing experience please update your browser to Google Chrome