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Exam Code: C-SAC-2421 Dumps

Questions and Answers: 104

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NEW QUESTION: 1
Erwin DeLavall, the Plant Manager of Patch Grove Cabinets, is trying to decide whether or not to replace the old manual lathe machine with a new computerized lathe. He thinks the new machine will add value, but is not sure how to quantify his opinion. He asks his colleague, Terri Wharten, for advice. Wharten's son just happens to be a Level 2 CFA candidate. DeLavall and Wharten provide the following information to Wharten's son:
Company Assumptions:
New Machine Assumptions:
Which of the following choices is most correct? Patch Grove Cabinets should:
A. not replace the old lathe with the new lathe because the new one will decrease the firm's value by
$5,370.
B. replace the old lathe with the new lathe because the new one will add $3,760 to the firm's value.
C. replace the old lathe with the new lathe because the new one will add $10,316 to the firm's value.
D. not replace the old lathe with the new lathe because the new one will decrease the firm's value by
$3,132.
Answer: B
Explanation:
Explanation/Reference:
Explanation:
The valuation method that shows the project's impact on the value of the firm is net present value (NPV).
To calculate NPV, we need to determine the initial investment outlay, the operating cash flows, and the terminal year cash flows. Then, we discount the cash flows at the WACC. The calculations are as follows:
Step 1: Initial Investment Outlay:
= cost of new machine + proceeds/loss from old machine + change in net working capital (NWC)
= -$90,000 + $30,000 - $6,800 + $5,000 =-$61,800(cash outflow)
Details of calculation:
o Sales price = $30,000inflow
o Tax/tax credit: $6,800outflow
o NWC =current assets -current liabilities = 20,000 - 25,000 = -5,000 (a decrease in working capital is a source of funds) Step 2: Operating Cash Flows (years 1-4):Given as$16,800inflow
Step 3: Terminal Value:
=year 5 cash flow + return/use of NWC + proceeds/loss from disposal of new machine + tax/tax credit
=$16,800 - $5,000 + $15,000 + $1,920 =$28,720inflow
Details of calculation:
o Sales price = $15,000inflow
o Tax/tax credit: $1,920inflow
Step 4:Calculate NPV:
NPV = -$61,800 + ($16,800 / 1.131) + ($16,800 / 1.132) +($16,800 / 1.133) +($16,800 / 1.134) +($28,720 /
1.135) =$3,759.
Since the NPV is positive, Patch Grove should replace the old lathe with the new one, because the new lathe will increase the firm's value by the amount of the NPV, or $3,759.
You may also solve this problem quickly by using the cash flow (CF) key on your calculator.



NEW QUESTION: 2
In a service provider SDN environment, which two steps take place in the BGP Link State Architecture?
(Choose two.)
A. IGP is redistributed into BGP-LS
B. Enable access to the Adj-RIB-In (BGP raw format) of a peer border router or provider edge router
C. Advertise the BGP-LS NLRIs to the topology server
D. IGP use BGPLS data from remote peers
E. BGP download the received BGP LS data to the IGP component on the router
Answer: A,C
Explanation:
Explanation/Reference:
References:

NEW QUESTION: 3
In which one of these areas do you store user credentials for accounts that are involved with communication between your company and a communications partner?
A. In output channel definition
B. In the communication system
C. In the communication scenario
D. In the communication arrangement
Answer: D


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