Questions from Corporate Finance

Q: Champlain Corp. management is investigating two computer systems. The Alpha

Champlain Corp. management is investigating two computer systems. The Alpha 8300 costs $3,122,300 and will generate cost savings of $1,345,500 in each of the next five years. The Beta 2100 system cost...

Q: Briarcrest Condiments is a spice-making firm. Recently, it

Briarcrest Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires new machinery that would cost $1,968,450, have a life of five years, and w...

Q: Why is D&A first subtracted and then added back in

Why is D&A first subtracted and then added back in FCF calculations?

Q: Cranjet Industries is expanding its product line and its production capacity.

Cranjet Industries is expanding its product line and its production capacity. The costs and expected cash flows of the two independent projects are given in the following table. The firm uses a discou...

Q: Emporia Mills management is evaluating two alternative heating systems. Costs and

Emporia Mills management is evaluating two alternative heating systems. Costs and projected energy savings are given in the following table. The firm uses 11.5 percent to discount such project cash fl...

Q: Creative Solutions, Inc., has just invested $4,615

Creative Solutions, Inc., has just invested $4,615,300 in new equipment. The firm uses a payback period criteria of not accepting any project that takes more than four years to recover its costs. Mana...

Q: Timeline Manufacturing Co. management is evaluating two projects. The company

Timeline Manufacturing Co. management is evaluating two projects. The company uses payback criteria of three years or less. Project A has a cost of $912,855, and project B’s cost is...

Q: Regent Corp. management is evaluating three competing types of equipment.

Regent Corp. management is evaluating three competing types of equipment. Costs and cash flow projections for all three are given in the following table. Which would be the best choice based on paybac...

Q: Nugent Communication Corp. is investing $9,365,000

Nugent Communication Corp. is investing $9,365,000 in new technologies. The company’s management expects significant benefits in the first three years after installation (as can be s...

Q: You own a company that competes with Old World DVD Company (

You own a company that competes with Old World DVD Company (in the previous problem). Instead of selling DVDs, however, your company sells music downloads from a web site. Things are going well now, b...