1. Textron is considering a NEW project. The financial projections are as follows:Year 0Year 124,0007,000Year 224,000Year 3Sales24,000Total Costs7,0007,000DepreciationCapital Investment (or Cost of Equipment)Working Capital (Requirements/Levels)10,00010,00010,00040,000200025001000The Equipment will be sold at the end of Year 3 for 11,000. The relevant tax rate is 35%.Compute the cash flows for the project.Please select file(s) Select file(s)

Net cash flows = Profit after tax + depreciation + Salvage -Tax on salvage - weoking capital Profi…

1. Textron is considering a NEW project. The financial projections are as follows: Year 0 Year 1 24,000 Year 2 24,000 Year 3 24,000 Sales Total Costs 7,000 7,000 7,000 Depreciation Capital Investment (or Cost of Equipment) Working Capital (Reguirements/Levels) 10,000 10,000 10,000 40,000 2000 2500 1000 The Equipment will be sold at the end of Year 3 for 11,000. The relevant tax rate is 35%. Compute the cash flows for the project. Please select file(s) Select file(s)

1. Textron is considering a NEW project. The financial projections are as follows: Year 0 Year 1 24,000 Year 2 24,000 Year 3 24,000 Sales Total Costs 7,000 7,000 7,000 Depreciation Capital Investment (or Cost of Equipment) Working Capital (Reguirements/Levels) 10,000 10,000 10,000 40,000 2000 2500 1000 The Equipment will be sold at the end of Year 3 for 11,000. The relevant tax rate is 35%. Compute the cash flows for the project. Please select file(s) Select file(s)

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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A company is considering a project with a cost of $248,000. The cash flows for the project are provided in the table below. If the required return for the project is 14.2%, what is the project's NPV? Year CF 1 $68,500 2 $72,800 3 $75,300 4 $81,400 5 $78,200 $81,422 $128,200 $6,481 $222,838 $254,481
3:Consider the following financial data for a project. 2- Find the (ROR) for the project.. We jus المصرر AP 1 = 10) b- If the the expense will increase by 10%, find the annual revenue that will make (POR-10%) Initial investment 18 000 CU Annual revenue 5000 CU Annual expense 3000 CU Salvage value 4500 CU Project life 12 YEARS
4. A project capitalized for ₱150,000 invested in depreciable assets will earn a uniform, annual income of ₱59, 547 in 10 years. The costs for operation and maintenance total ₱27,000a year, and taxes and insurance will cost 4% of the first cost each year. If the company expects its capital to earn12% before income taxes, is the investment worthwhile? Show by: Annual cost method Solve and show the solution.
Management of Wildhorse, Inc., is considering switching to a new production technology. The cost of the required equipment will be $4,000,000. The discount rate is 11 percent. The cash flows that management expects the new technology to generate are as follows. Years 1-2 3-5 6-9 CF 0 $750,000 $1,450,000 a. Compute the payback and discounted payback periods for the project. (Round answers to 2 decimal places, e.g. 15.25.) The payback for the project is The NPV of the project is $ years, and the discounted payback period is b. What is the NPV for the project? Should the firm go ahead with the project? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round intermediate calculations to O decimal places, e.g. 1,525 and final answer to O decimal places, e.g. 5,125.) The IRR of the project is , and using the NPV rule the project should be c. What is the IRR, and what would be the decision based on the IRR? (Round answer to 3 decimal places, e.g.…
You Answered Some particulars for a project are as follows. Initial Capital Cost in year 0 ($Mn) Follow-up 'one-off' cost in year 1 ($Mn) Annual Operating Cost ($Mn/yr) Annual Benefits ($Mn/yr) Correct Answers Project Closure Cost, at end of project life ($Mn) Useful Life (years) Interest/Discount rate (percent) 1000 300 10% of capital cost 400 2,391 (with margin: 5) 200 20 7 What is the Life Cycle Cost of the project - expressed in present value term? (your answer must be rounded off to the nearest million dollars, i.e., no decimal places)
Q1: For the machines indicated below. Consider i= 10% per year First cost Annual cost Salvage value Life duration Machine A 20,000 $ 5,000 $ 7,500 $ 3 Machine B 25,000 4,000 6,000 4 A- Draw cash flow diagram for each machine for one cycle of each project B- Draw cash flow diagram for each project considering the LCM life cycle (Hint: different project duration, need to have the LCM life cycle) C- Compare the machines to select best alternative one based on Present worth analysis method D- Repeat part B considering Future worth analysis
Hh2. Account
3. A project requires an initial investment of $1,000,000 and generates annual income of $300,000 for the next 4 years with a salvage value of $200,000. At MARR of 10% determine if this is a good investment. Use MACRS with the depreciation life of 3 years. Effective tax rate is 40%. Use PW.
You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000
What is the annual equivalent worth of a project where (a) the initial investment is $50,000; (b) will have revenues of $8,000 per year; (c) annual cost of operation and maintenance of $1,200 and (d) a residual or salvage value of $2,000 after 15 years? Assume rate of return is 8%. A. $-41,200 B. $13,438 C. $6,800 D. $288 E. -$712 F. $3,600
cure Rex Industries plans to expand its product line. The project requires an initial investment of $285,000 to purchase new equipment. The project is expected to generate the following annual revenues and expenses each year during its 9-year life: . Sales revenues Variable costs Contribution margin Fixed costs: - Salary expense - Rent expense Depreciation expense O 4.4 years O 4.6 years O 8.4 years $31,000 39,000 30,000 O 8.9 years O None of the above $170,000 (38,000) $132,000 Operating income The only non-cash item of income or expense is depreciation expense. The salvage value of the equipment at the end of the 9 years is $15,000. What is the payback period of this project in years? Round to one decimal point. (100,000) $32,000 PQ
q4- Project A requires an initial outlay of $10000 and will last for 5 years. The investment will be depreciated using straight‐line depreciation to a book value of 0 over the life of the project. The corporate tax rate is 30% and the required rate of return is 8%. What is the annual depreciation amount for Project A?

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