Vrije Universiteit Amsterdam

Harley Davidson heeft zijn assemblagefabriek in Wilwaukee waar verbrandingsmotoren worden geassembleerd. De motorfietsen worden vervaardigd in een assemblagefabriek in Pennsylvania. De verbrandings- motoren worden met vrachtwagens tussen de twee fabrieken vervoerd. • Elke vrachtwagenrit kost $1500. • De motorfietsfabriek assembleert en verkoopt 300 motorfietsen per dag. • Elke motor kost $450. • Harley Davidson heeft een voorraadkostenpercentage (holding rate) van 20 procent per jaar. Analyseer onderstaande vragen vanuit het perspectief van de motorfietsassemblagefabriek in Pennsylvania: A. Hoeveel verbrandingsmotoren moet Harley Davidson op elke vrachtwagen laden om de motorfietsenassemblagefabriek te bevoorraden? B. Wat is de cyclische voorraad van verbrandingsmotoren in de motorfietsassemblage fabriek in Pennsylvania?

Company FINE-ART is considering the implementation of a new project that now (t = 0) requires an investment in a machine of €40.000. The expected pre-tax operating cash flow (measured in nominal terms) at the end of years 1 and 2 is equal to €75.000 and €71.000, respectively. The machine of €40.000 will be depreciated on a straight-line basis over two years based on historical cost to €0 (in nominal terms). The corporate income tax rate is 20,00%. The cost of capital in real terms is 10,00%. A constant annual inflation rate of 5,00% is expected for the coming years. Question: Calculate the net present value of the project. Round your answers to euros (zero decimals) and ignore the "euro" sign and use a comma instead of a point for separating thousands (for example: enter €12.345,67 as 12,346) Company FINE-ART is considering the implementation of a new project that now (t = 0) requires an investment in a machine of €40.000. The expected pre-tax operating cash flow (measured in nominal terms) at the end of years 1 and 2 is equal to €75.000 and €71.000, respectively. The machine of €40.000 will be depreciated on a straight-line basis over two years based on historical cost to €0 (in nominal terms). The corporate income tax rate is 20,00%. The cost of capital in real terms is 10,00%. A constant annual inflation rate of 5,00% is expected for the coming years. Question: Calculate the net present value of the project.

Of project PARADISE, the expected cash flows in euros before tax are shown in the table below. The applicable corporate tax rate is 15%. Ignore other taxes. The capital expenditure (at t = 0) for project PARADISE is €160 and is depreciated to zero on a straight-line basis over 2 years. The discount rate is 10,00%. Table 1: Expected cash flows in euros before tax. t CFt 0 –160 1 200 2 139 Question: Calculate the net present value of the project. Round your answer to euros (zero decimals) and ignore the “euro” sign when entering the answer (for example: enter €123,45 as 123).

Company GREENERY is considering implementing a new project that now (t = 0) requires an investment in a machine of €600. In addition to the investment in a new machine, investment in working capital is required. Working capital consists of Accounts Receivable, Inventories and Accounts Payable. The table below shows the size of these items at the beginning of year 1 (t = 0) and the end of year 1 through 3 ( t = 1, t = 2, t = 3). t 0 1 2 3 Accounts Receivable €0 € 150 € 31 € 195 Inventories € 75 € 50 € 34 € 105 Accounts Payable € 51 € 70 € 112 € 60 Question: Calculate the working capital at the end of year 3. Round your answer to euros (zero decimals) and ignore the “euro” sign when entering the answer (for example: enter €123 as 123).

Company GREENERY is considering implementing a new project that now (t = 0) requires an investment in a machine of €600. In addition to the investment in a new machine, investment in working capital is required. Working capital consists of Accounts Receivable, Inventories and Accounts Payable. The table below shows the size of these items at the beginning of year 1 (t = 0) and the end of year 1 through 3 ( t = 1, t = 2, t = 3). t 0 1 2 3 Accounts Receivable €0 € 150 € 31 € 195 Inventories € 75 € 50 € 34 € 105 Accounts Payable € 51 € 70 € 112 € 60 Question: Calculate the working capital at the end of year 3. Round your answer to euros (zero decimals) and ignore the “euro” sign when entering the answer (for example: enter €123 as 123).

Company WYBO from STOMPWIJCK is considering investing in project BESTCHEESE. The investment is made at t = 0 and amounts to €200,00. At t = 1, the project is expected to generate a cash flow of €27,00 that grows at an annual rate of 5,00% until infinity. The required rate of return is 13,00%. Question: Calculate the profitability index (PI = present value of expected CFs / Investment) of the project. Round your answer to 1 decimal place. When entering your answer use a decimal point instead of a decimal comma (for example: enter 3,45 as 3.5). Company WYBO from STOMPWIJCK is considering investing in project BESTCHEESE. The investment is made at t = 0 and amounts to €200,00. At t = 1, the project is expected to generate a cash flow of €27,00 that grows at an annual rate of 5,00% until infinity. The required rate of return is 13,00%. Question: Calculate the profitability index (PI = present value of expected CFs / Investment) of the project. Round your answer to 1 decimal place. When entering your answer use a decimal point instead of a decimal comma (for example: enter 3,45 as 3.5).