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- If discretionary expenses are $500, cash flow before discretionary expenses are $2,000, and discretionary capital expenditures are $500, what is the discretionary payout percentage? A. 50% B. 25% C. 20% D. 250%Last year, Industrial Industries had Operating Cash Flow of 125,000. It had Net Capital Spending of 45,000 and an investment in Net Working Capital of 15,000. What was its Cash Flow from Assets (or Free Cash Flow)? Question 4 options: ($65,000) $85,000 $95,000 $155,000 $65,000Given the following figures - what is closing capital? Opening Capital £250,000 Net Profit £32,000 Drawings £25,000 Select one £193,000 £257,000 £307,000 £243,000
- 13. An investment requires working capital equal to 15% of the year’s sales revenue to be in place at the start of the relevant year. The sales revenue for the three year project is forecast as £80,000, £100,000 and £90,000. What is the cashflow relating to working capital at time 2? A £1,500 outflow B £3,000 outflow C £1,500 inflow D £3,000 inflow2. Calculating Project NPV The Fleming Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 22 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Investment Sales revenue Operating costs Depreciation Net working capital spending Year 0 $32,800 450 Year 1 Year 2 Year 3 Year 4 $14,200 2,100 8,200 175 $15,900 $15,700 2,100 2,100 8,200 8,200 250 275 $12,900 2,100 8,200 ? a. Compute the incremental net income of the investment for each year. b. Compute the incremental cash flows of the investment for each year. c. Suppose the appropriate discount rate is 12 percent. What is the NPV of the project?What is the MIRR for the project using a 12% Cost of Capital? Show in a timeline format. Year Cash Flow in $ 0 ($1000) 1 400 2 400 3 600
- Compute the NPV of the project below assuming that the cost of capital is 8%: Year 0 1 2 3 FCF -85,000 55,000 55,000 68,000A company invests $350,000 in a project with the following net cash flows: • Year 1: $43,000 • Year 2: $48,000 • Year 3: $55,000 • Year 4: $36,000 • Year 5: $74,000 • Year 6: $65,000 • Year 7: $30,000 In what year does payback occur? O Year 4 O Year 7P10–12 Payback and NPV Neil Corporation has three projects under consideration. The cash flows for each project are shown in the following table. The firm has a 16% cost of capital. Project A Project B Project C Initial investment (CF0) −$40,000 −$40,000 −$40,000 Year (t) Cash inflows (CFt) 1 $13,000 $ 7,000 $19,000 2 13,000 10,000 16,000 3 13,000 13,000 13,000 4 13,000 16,000 10,000 5 13,000 19,000 7,000 Calculate each project’s payback period. Which project is preferred according to this method? Calculate each project’s net present value (NPV). Which project is preferred according to this method? Comment on your findings in parts aand b, and recommend the best project. Explain your recommendation.
- 20 capital investment by $55,000. What was e III 3 14. Calculating Total Cash Flows (LO3) Teeswater Corp. shows the following information on its 2020 statement of comprehensive income: sales = $235,000; costs = $141,000; other expenses = $7,900; depreciation expense = $17,300; interest expense = $12,900; taxes = $19,565; dividends = $12,300. In addition, you're told that the firm issued $6,100 in new equity during 2020 and redeemed $4,500 in outstanding long-term debt. a. What is the 2020 operating cash flow? b. What is the 2020 cash flow to creditors? c. What is the 2020 cash flow to shareholders? d. If net fixed assets increased by $25,000 during the year, what was the addition to NWC? Page 64Problems 1. The capital investment committee of Taiwan Semiconductor Company is considering two capital investments. The estimated income from operations and net cash flows from each investment are as follows: 123 45 Year Total Lithography Machine Income from Operations $26,000 21,000 7,000 4,000 Problem 1 Instructions 1,450 $59,450 Net Cash Flow a. Compute the following: i. ii. $41,000 35,000 22,500 18,000 16,150 $132,650 Photoresist Machine Income from Operations $12,250 12,250 12,250 12,250 12,250 $61,250 Net Cash Flows Each project requires an investment of $75,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 12% for purposes of the net present value analysis. $25,250 25,250 25,250 25,250 25,250 $126,250 The average rate of return for each investment. The net present value for each investment. Use the present value of $1 table appearing in this chapter (Exhibit 2). (Round present values to the nearest dollar.) b.…Three companies have provided estimates for a proposed project: Item Company A Company B Company C Capital Investment $100,000 $150,000 $125,000 Useful Life (Months) 96 144 120 Market Value $40,000 0 $30,000 Net Annual Cash $45,000 $500,000 $35,000 Flow 12% MARR 12% 12% What is the AW for each of the 3 estimates? It is thought useful life is the estimate which has the greatest volatility. If the pessimistic estimate is 8 years and the optimistic estimate is 12 years what is the worst and best case conditions for AW and which proposal would you recommend?