University of Connecticut School of Business -Department of Finance Financial Management (FNCE3101) Homework 4 – Spring 2022 Prof. John D. Knopf Due: April 4th 11:59pm Complete on an EXCEL spreadsheet...

It is attached to the file and has to be done on excel.


University of Connecticut School of Business -Department of Finance Financial Management (FNCE3101) Homework 4 – Spring 2022 Prof. John D. Knopf Due: April 4th 11:59pm Complete on an EXCEL spreadsheet and submit to HUSKYCT. 1. A company is considering the following project. It’s required rate of return is 10%. Its Payback cutoff is 4 years. Year Cash Flow 0 -250,000 1 +50,000 2 +100,000 3 +30,000 4 +50,000 5 +90,000 6 +60,000 a. What is the Payback Period? Should the company accept the project using the Payback method? b. What is the NPV? Should the company accept the project using the NPV method? c. What is the IRR? Should the company accept the project using the IRR method? 2. CTC Co. bought a new machine for $200,000. CTC will depreciate the machine using the ACRS method. The machine is classified as a 7-year asset. How much will CTC depreciate each year for the depreciable life of the asset? 3. The Loviscek Co. is considering the purchase of a new machine. Financial projections for the investment are provided below. Year 0 1 2 Cost of New Machine 500,000 Fixed Costs 100,000 125,000 Depreciation 90,000 100,000 Net Working Capital 50,000 40,000 60,000 The price per unit and variable cost per unit are $40 and $25, respectively. The company expects to sell 30,000 units per year in years 1 & 2. After Year 2 cash flows will grow at a constant rate of 3% forever. The company discounts all cash flows at 10% and has a marginal tax rate of 20%. What is the Net Present Value of the project?