Home     Forum     401k     401k Rollovers
    Register   Login   Members   Search   FAQs     Recent Posts    




Finance question for university, can anyone help?

Reply to topic
Money Talk > Personal Finance

Author Thread
Confusedstudent
New Poster


Cash: $ 0.45

Posts: 2
Joined: 04 Apr 2009

Finance question for university, can anyone help?  Reply with quote  

I have been racking my brain trying to figure out this question, my mom works at an accounting firm and nobody could help me. Im actually in HR so taking finance class is a bit difficult for me, no idea why HR students are doing finance problems like this.

If anyone can help me solve this problem im willing to send 25 dollars to a paypal account for the help. It asks to calculate the Net present value of 2 projectst, and i am totally stuck.

Question.

As a financial analyst at Minor international (MI) you have been asked to evaluate two capital investment alternatives submitted by the production department. of the firm. Before begining your analysis, you note that a company has set the cost of capital at 16 percent for all proposed projects. As a small business MI pays corporate taxes at a rate of 35 percent.

The proposed capital project calls for developing new computer software. Alternative A has initial software development costs projected at 175,000. While alternative B would cost 290,000. SOftware development costs would be capitalized and qualify for a capital cost allowance rate of 30 percent. In addition, IT would hire a software consultant under either alternative to assist in making the decision whether to invest in the project for a fee of 15000, and this cost would be expensed when its incurred.

To recover its costs MI's IT department would charge the production department for the use of computer time at the rate of $310 per hour and estimates that it would take 100 hours of computer time per year to run the new software under either alternative. MI owns all its computers and does not currently opperate them at capacity. The IT plan class for this excess capacity to continue in the future. For security reasons its is company policy not to rent excess computer capacity to outside users.

If the new partial automation production is put in place, expected savings in production cost before tax are projected as follows.


Year-Alternative A-Alternative B


1 70,000 100,000
2 70,000 105,000
3 60,000 90,000
4 30,000 50,000
5 20,000 30,000


Calculate the Net present value of each alternative.
Post Sat Apr 04, 2009 4:52 am
 View user's profile Send private message
coaster
Senior Advisor


Cash: $ 1626.30

Posts: 7990
Joined: 11 Oct 2005
Location: Wisconsin
 Reply with quote  

This is relatively easy to do in a spreadsheet. I suggest you google "cost of capital" there are a number of excellent articles out there. Morningstar has probably the best series of tutorials on capital analysis. I think you have to register to have access to in, click on "stocks" on the top menu, then scroll down and click on "learn" on the left side menu.

If you're asking someone to do your work for you, sorry can't do that. Wink

~Tim~
Post Sat Apr 04, 2009 4:39 pm
 View user's profile Send private message
oldguy
Senior Member


Cash: $ 736.65

Posts: 3582
Joined: 21 May 2006
Location: arizona
 Reply with quote  

To get you started, Alt A has an annual depreciation tax break of $175,000 * .3 * .35 = $18,375/yr. Plus $31,000/yr income. Plus a $70,000 savings in Y1. Minus .16 * $175,000 = $28,000 COM.


quote:
Im actually in HR so taking finance class is a bit difficult for me, no idea why HR students are doing finance problems like this.


Just to ping on you a bit - Smile Is HR a college major? Or classes toward a minor? If you get a degree in an 'applied skills' curriculum - engineer, nurse, accountant, teacher - you can hit the ground with a $50k to $60k starting salary. And if you get a BA in a 'soft' major - liberal arts, communication, social work - it is a bit tougher to get a start, you might work for $25k for awhile. So you wouild want to adjust student loans, etc, accordingly. In any case - go for the education, not the degree - take the finance classes seriously.
Post Sat Apr 04, 2009 6:57 pm
 View user's profile Send private message
Confusedstudent
New Poster


Cash: $ 0.45

Posts: 2
Joined: 04 Apr 2009

 Reply with quote  

Thanks for the help.

This is the last question on my assignment, I did the rest of the assignment pretty easy. I have worked for hours on this but am still having trouble.

Human resource is a 4 year major at my university, I am graduating this year with a degree. Human resource is under bachelor of management, the degree's all state that, everything under bachelor of management (finance, accounting, human resources, marketing, general management)

I have a diploma in financial planning, but to be honest, I really didnt like finance at all so i did not want to do it as a career. I also was not very good at it, despite doing pretty good in the classes. They actually cancelled it after i got my diploma, nobody was taking it.

To be honest my freinds in human resource here in canada have done better then my freinds who graduated with a finance degree. One freind in hr is working for a big mining company doing the hiring for them ect.. As well as my room mate.


My freinds in finance all but one have all went back to get accounting degree. One freind who didnt was recently laid off at the bank he worked for, TD bank closed the one he worked at. My freinds were also started off as tellers at there job, they moved on pretty quick, but there starting salary they assured me is nothing special.

Not to say that he wont do better and make more money then me in life, but i just dont like working with numbers.


As for dealing with my money and paying back my student loan i think im pretty good with that, the government gave us 4000 this year that did not need to be paid back, unlike alot of my other freinds who spent it on vacations and other things, i put it to pay off my loan.
Post Sat Apr 04, 2009 10:40 pm
 View user's profile Send private message
coaster
Senior Advisor


Cash: $ 1626.30

Posts: 7990
Joined: 11 Oct 2005
Location: Wisconsin
 Reply with quote  

HR is pretty much all outsourced here in the states. Something to think about when deciding......

~Tim~
Post Sun Apr 05, 2009 1:59 am
 View user's profile Send private message
suraja
Contributing Member


Cash: $ 7.45

Posts: 48
Joined: 22 Feb 2009
Location: Suraja.com
 Reply with quote  

Yes, HR is prospective area you can work with
Post Sun Apr 05, 2009 5:09 am
 View user's profile Send private message Visit poster's website
urvi88
Contributing Member


Cash: $ 8.40

Posts: 41
Joined: 12 Jun 2009

 Reply with quote  

quote:
Originally posted by suraja
Yes, HR is prospective area you can work with

Ya i agree with this that HR is a good field to work.
Post Mon Jun 22, 2009 10:12 am
 View user's profile Send private message
joedaskin4
First Time Poster


Cash: $ 0.20

Posts: 1
Joined: 14 Jun 2010

 Reply with quote  

Thanks for post. It's very useful
Post Mon Jun 14, 2010 10:31 am
 View user's profile Send private message
Croler
New Poster


Cash: $ 0.40

Posts: 2
Joined: 25 Nov 2017

 Reply with quote  

It's little hard question for ordinary person. I'm understand, that it is narrow question and most of us can't help you, but you can ask help with your finance reports from real professionals, who can give you reasonable answer and you will satisfy.
Post Sat Nov 25, 2017 1:34 pm
 View user's profile Send private message

Reply to topic
Forum Jump:
Jump to:  
  Display posts from previous:      





Money Talk © 2003-2016