1. Batinah Water Desalination project is a 15 year project. The project manager estimated that net initial investment expenc in year zero is 100 million rials. The investment will be depreciated on a straight line basis to a 10 million book value by en the project. During the operating phase revenue per year is 35 million and expense per year is estimated to be 20 million ri per year for 15 years. In year 15 net salvage value is estimated to be 15 million. WNACC is estimated to be 10%. Tax Rate 20 1. Calculate annual depreciation expenses 2. Calculate cash flow after tax CFAT in year 5 3. Calculate net present value. 4. Is it a good project

1. Batinah Water Desalination project is a 15 year project. The project manager estimated that net initial investment expenc in year zero is 100 million rials. The investment will be depreciated on a straight line basis to a 10 million book value by en the project. During the operating phase revenue per year is 35 million and expense per year is estimated to be 20 million ri per year for 15 years. In year 15 net salvage value is estimated to be 15 million. WNACC is estimated to be 10%. Tax Rate 20 1. Calculate annual depreciation expenses 2. Calculate cash flow after tax CFAT in year 5 3. Calculate net present value. 4. Is it a good project

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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3. Superserv Inc. intends to acquire new equipment for $10 million and has an estimated life of 5 years and a salvage value of $800K. The new equipment is expected to allow additional annual sales of $5 million over the next 5 years. The associated additional annual operating costs are expected to be $2.5 million, while the interest on debt issued to finance the project is $1.5 million. In addition, working capital will increase by $1.2 million at the outset. The project's cost of capital is 10%. The firm's tax rate is 40%. The annual depreciation charge on the new machine is $2 million. What is the project's NPV? ($-1.438m)< This is the answer however I need to know how to obtain this answer with a financial calculator, please do not use excel
ZLX is evaluating an investment and has generated the following: Initial investment at time t=0 is $2,000,000 Life of project is 8 years Initial investment depreciated to $0 via straight-line over entire life NWC investment required = $0.00 Expected market salvage value of investment assets = $0.00 Starting 1-year from today, and remaining constant over project life: Incremental sales as a result of investment = $1,600,000 / year Incremental expenses as a result of investment = $1,100,000 / year firm' tax rate = 28% What is the IRR of this investment? Enter rate in decimal form, rounded to fourth digit, as in "0.1234"
Consider a three-year project with the following information: initial fixed asset investment = $347,600; straight-line depreciation to zero over the three-year life; zero salvage value; price per unit = $49.99; variable costs per unit = $30.82; fixed costs per year = $187,000; quantity sold per year = 65,500 units; tax rate=35 percent. How sensitive is OCF to an increase of one unit in the quantity sold?
A 5-year project is expected to generate annual sales of 8,800 units at a price of $75 per unit and a variable cost of $46 per unit. The equipment necessary for the project will cost $309,000 and will be depreciated on a straight-line basis over the life of the project. Fixed costs are $185,000 per year and the tax rate is 21 percent. How sensitive is the operating cash flow to a $1 change in the per unit sales price? Multiple Choice $3,254 $3,629 $6,952 $4,752 $4,003
a project estimated initial cost is $170,000. The project is expected to generate the following cashflows for the first 7 years. Years Net cashflows $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 If the company is MARR is 12%, using NPW/NFW analysis is the project profitable?
5. The original investment in a project was $64,197. The project has a life of ten years and the company requires a 10% rate of return on all investments. The annual net income was $24,464.1. $ 10,379 was the depreciation expense. What is the project's profitability index rounded to two decimal places?
Consider a piece of equipment for which the expenditure at the beginning of period 1 is $20,000 The net revenue at the end of year 1 is $8,000 The net revenue at the end of year 2 is $14,000 The net revenue at the end of year 3 is $18,000, which includes salvaging the equipment. The interest rate is 5%. What is the net present value of this investment over the three year period including the initial purchase of the asset and the revenue from the first three years of operation (including sale of the equipment)?
Joetz Corporation has gathered the following data on a proposed investment project (Ignore income taxes.): Investment required in equipment $ 33,500 Annual cash inflows $ 7,400 Salvage value of equipment $ 0 Life of the investment 15 years Required rate of return 10% The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. The simple rate of return for the investment (rounded to the nearest tenth of a percent) is: Brewer 9e Rechecks 2021-11-26 Multiple Choice 24.7% 15.4% 21.6% 11.2%
A two-year project has sales of $582,960, cash costs of $411,015, and depreciation expense of $68,109. The tax rate is 24 percent and the discount rate is 12 percent. What is the amount of the annual depreciation tax shield? O $23,606.67 O $16,346.16 O $47,213.34 O $26,210.01 A Moving to another question will save this response. Question 12 of 30
Required information. [The following information applies to the questions displayed below.] Project Y requires a $331,500 investment for new machinery with a five-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1. and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation). Depreciation Machinery Selling, general, and administrative expenses Income Years 1-5 4. Determine Project Y's net present value using 9% as the discount rate. Note: Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar. Net present value Not Cash Flows Project Y $ 400,000 Present Value of Annuity at 9% 179,200 66,300 29,000 $ 125,500 Present Value of Net Cash Flows
Required Information [The following information applies to the questions displayed below.] Project Y requires a $327,000 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project Y $ 360,000 161,280 81,750 26,000 $ 90,970 2. Determine Project Y's payback period. Project Y Payback Period Numerator: 1 Denominator: 1 Payback Period = 0
Harris Corporation has provided the following data concerning an investment project that it is considering: Initial investment Annual cash flow Salvage value at the end of the project Expected life of the project Discount rate $ 160,000 $ 54,000 $ 11,000 O $67,000 O $160,516 O $516 O $(5,776) 4 15 per year years % Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the project is closest to:

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