# Amadeus Corporation Finance Assignment Help With Solution

## Amadeus Corporation Finance Assignment Help With Solution

Amadeus Corporation is considering the issue of a new product to be added to its product mix. They hired you, a recent business graduate, for conducting the analysis. The production line would be set up in an unused space at the company’s main plant. The plant space could be leased out to another firm at \$20,000 per year. They have to buy new machinery. The approximate cost of the machine would be \$170,000, with another \$15,000 in shipping and handling charges. It would also cost an additional \$25,000 to install the equipment. The machinery has an economic life of 6 years and would be in Class 8 with a CCA rate of 35%. The machinery is expected to have a salvage value of \$90,000 after 6 years of use.

The new product line would generate incremental sales of 1,400 units per year for 6 years and they are expected to grow 5% per year. The cost per unit is estimated in \$55 per unit in the first year. Each unit can be sold for \$200 in the first year. The sales price and cost per unit are both expected to increase by 3.2% per year due to inflation. The fixed costs are estimated to be \$100,000 at the end of 1st year and would increase with inflation. To handle the new product line, the firm’s net operating working capital would be an amount equal to 15% of sales revenues. The firm tax rate is 37%. There are 1000 common shares outstanding with market price of \$40 each. Also they have 100 preferred shares with market value of \$50. There are \$50,000 long-term bond trading in market with an average price of \$1,100 and 6 years to maturity, and 8% semi-annual coupon. Common shares of firm have a beta of 1.3. Risk free rate is 4% and expected market return is 16%. Preferred stock holder are receiving 1 dollar quarterly dividend. The project is considered by the financial department to be as risky as the company. The reinvestment risk is assumed to be 15%.

## How it Works

#### How It works ?

Step 1:- Click on Submit your Assignment here or shown in left side corner of every page and fill the quotation form with all the details. In the comment section, please mention product code mentioned in end of every Q&A Page. You can also send us your details through our email id support@assignmentconsultancy.com with product code in the email body. Product code is essential to locate your questions so please mentioned that in your email or submit your quotes form comment section.

Step 2:- While filling submit your quotes form please fill all details like deadline date, expected budget, topic , your comments in addition to product code . The date is asked to provide deadline.

Step 3:- Once we received your assignments through submit your quotes form or email, we will review the Questions and notify our price through our email id. Kindly ensure that our email id assignmentconsultancy.help@gmail.com and support@assignmentconcultancy.com must not go into your spam folders. We request you to provide your expected budget as it will help us in negotiating with our experts.

Step 4:- Once you agreed with our price, kindly pay by clicking on Pay Now and please ensure that while entering your credit card details for making payment, it must be done correctly and address should be your credit card billing address. You can also request for invoice to our live chat representatives.

Step 5:- Once we received the payment we will notify through our email and will deliver the Q&A solution through mail as per agreed upon deadline.

Step 6:-You can also call us in our phone no. as given in the top of the home page or chat with our customer service representatives by clicking on chat now given in the bottom right corner.

## Features

#### Features for Assignment Help

Zero Plagiarism
We believe in providing no plagiarism work to the students. All are our works are unique and we provide Free Plagiarism report too on requests.

Relevancy
We believe in providing perfect, relevant and 100% accurate solutions to the student as per questions asked. All our experts are perfect in providing that so as to give unique experience to the students.

Three Stage Quality Check
We are the only service providers boasting of providing original, relevant and accurate solutions. Our three stage quality process help students to get perfect solutions.

100% Confidential
All our works are kept as confidential as we respect the integrity and privacy of our clients.

## Related Services

Requirements

1. Using an Excel spreadsheet:
• Find the NPV, IRR and MIRR of the project by using the pro forma financial statement method to determine cash flows.
• Enter the input variables in cells of their own at the top of the spreadsheet (so it is easier to do sensitivity analysis calculations).
• Set up the necessary equations by referencing to the input variable cells. The spreadsheet must be formula driven; do not put any numbers in equations, only cell references.
• Use Excel’s built-in functions wherever possible (e.g. NPV and IRR functions).

2. Breakeven analysis
At what WACC rate and Unit Sales price the project is going to break-even based on NPV method.

3. Sensitivity analysis
Consider the following assumptions for the company and for each case individually calculate the NPV and include these analyses in your final recommendation.
Perform sensitivity analysis on the unit sales, variable costs and the cost of capital (WACC) for the project. Assume that each of these variables can vary from its base-case value by ±20%. Summarize the results in a table (NPVs and IRRs for each sensitivity analysis).

4. Scenario Analysis
Assume that you are confident of your estimates of all variables that affect the project’s cash flows except unit sales and sales price. If product acceptance is poor, unit sales will be only 900 units a year and the unit price will be only \$150; a strong demand will produce sales of 1,700 units and a unit price of \$240. The marketing department told you that there is a 25% chance of poor acceptance and 25% chance of strong acceptance, and a 50% chance of average acceptance (the base case).

(a) What are the worst case NPV and the best case NPV?

(b) What are the expected NPV and risk involved given the mentioned probabilities?

5. Recommendation
Use the results you obtained in the NPV, IRR, breakeven, sensitivity and scenario analysis above to write a one page report on your findings and recommend whether or not the company should proceed with the project.

6. Present this assignment in a professional way. It is your responsibility to communicate clearly to the marker.

### Product Code :Fin196

To get answer for this question, kindly click here (Note: Don’t forget to write the product code in comment section)

You can also email us at assignmentconsultancy.help@gmail.com but please mentioned product code in the mail body while sending emails.You can browse more questions to get answer in our Q&A sections here.

Summary