A company is considering two mutually exclusive projects. Both require an initial cash outlay of Rs.20000 each, and have a life of five years. The company’s required rate of return is 10% and pays tax at a 35% rate. The projects with be depreciated on a straight – line basis. The before taxes cash flows expected to be generated by the projects are as follows. Before-tax cash flows (Rs.) Project1 2 3 4 5 A 8000 8000 8000 8000 8000B 12000 6000 4000 10000 10000 calcualte for each project: The NPV and the internal rate of return. Which project should be accepted and why.

Q: Flora Company has recorded the following cash flows at the end of each year for a project. If the…

A: Present value: It can be defined as today’s worth of an investment that will be received in the…

Q: a project will increase sales by $92,800 and cash expenses by $53,200. The project will cost $89,000…

A: Operating cash flow is an important concept. It considers depreciation as a provision to get tax…

Q: depreciated on a straight-line basis. The before taxes cash flows expected to be generated by the…

A: The process through which a company evaluates possible big projects or investments is known as…

Q: Required: a. Determine the discounted rate of return.

A: Formula: Discount rate= Lower Rate +Lower NPV×Higher Rate-Lower RateLower NPV-Higher NPV

Q: A project has the following net profit after tax set out below. The average book value of the assets…

A: ARR is one of the capital budgeting tools that can be used by an investor to evaluate a proposed…

Q: ears. The company's required rate of return is 10% and pays tax at a 35% rate. The projects with be…

A: Given information : Year Cash flows A  Cash flows B 0 -20000 -20000 1 4000 6600 2 4000 8300…

Q: Duo Corporation is evaluating a project with the following cash flows. The company uses a discount…

A: The modified internal rate of return is a financial metric that adjusts some drawbacks of the…

Q: A project capitalized for ₱25,000 invested in depreciable assets will earn a uniform, annual income…

A: Here, Investment = I = P 25,000 Uniform annual income = P 29,647 O & M cost = P 5,000 Taxes and…

Q: The Company is considering two independent projects. One project involves a new product line, and…

A: Project 1 Given that Revenue    = 750000 Cash expenses            = 325000 Depreciation…

Q: I am considering two mutually exclusive projects, each with a cost of $600 and a 3-year life…

A: As per the given information: Initial cost - $600 Period - 3-year life Cash flows for Project A -…

Q: Maud'Dib Intergalactic has a new project available on Arrakis. The cost of the project is $34,500…

A: Step 1: Identify all the relevant data in the problemCost of project: $34,500*cash flows of $18,600,…

Q: Consider the following after-tax cash flows: (a) Compute the project balances for Projects A and D,…

A: Cash flows are the cash and cash equivalents that flows in and out of the business in a particular…

Q: In a 3-year capital project, cash revenues are expected to increase by $120.000 and cash operating…

A: In this we have to find out tax sheild of depreciation and increase in cash flow.

Q: St. John's Shipyard is considering the replacement of an 8-year old machine that has been fully…

A: As per honor code, we can provide solution to only first question, so here we go:   NPV calculates…

Q: Using excel, calculate the payback period, NPV and IRR for each project

A: Payback Period : Payback period is defined as the number of years required to recover the original…

Q: A project capitalized for ₱150,000 invested in depreciable assets will earn a uniform, annual income…

A: Initial Cost = 150,000 Annual Cash Flow = Annual Income - Operations and Maintenance Cost -…

Q: Please correct show steps

A: The objective of the question is to calculate the Year 1 cash flow for a proposed project. The cash…

Q: The NUBD Co. is planning to purchase a new machine. The payback period will be 6 years. The cash…

A: Pay back period means cost of asset is recovered in that period through CFAT. Therefore in the above…

Q: Trinity has a project costing $2,050,000 that will have the following after tax cash flows in years…

A: Net present is the difference  between present value of all cash inflows and initial investment. NPV…

Q: Maven Design Inc. is considering two investment projects, X and Y. Company’s cost of capital is…

A: Various capital budgeting tools can be used by the investors for the assessment of the project's…

Q: X-treme Vitamin Company is considering two investments, both of which cost $34,000. The cash flows…

A: Payback Period The payback period is the amount period of time required to repay the expenses of the…

Q: The initial investment of a project is OMR 50,000. The profit after interest and tax (Cash inflows)…

A: Option a is correct.

Q: Q. A project requires an initial investment in machinery of $400,000. Additional cash inflows of…

A: Cash outflow 400000 Cash inflow Year 1 Inflow .                                      150000 Less…

Q: Kara, Incorporated, imposes a payback cutoff of three years for its international investment…

A: The above answer can be explained as under -The payback period is calculated after calculating…

Q: There are two mutually exclusive projects under the active consideration of a company. Both projects…

A: NPV is also known as Net Present Value. It is a Capital budegting techniques which help in decision…

Q: Duo Corporation is evaluating a project with the following cash flows. The company uses a discount…

A: Discount Approach:step1:we find value of all neagative cash flows to time 0.Cash flow at t=0 =…

Q: Q. A project requires an initial investment in machinery of $400,000. Additional cash inflows of…

A: NPV: It is the present value of cash flows at a required rate of return on a project as compared to…

Q: Suppose an asset has a first cost of $8,000,a life of five years, a salvage value of $2,000 atthe…

A: Cash Flow form Operation after tax may be calculated using either: Direct method or Indirect method.…

Q: Consider an asset that costs $176,000 and is depreciated straight-line to zero over its 10- year tax…

A: Cost of asset = $176,000 depreciationmethod is straight line methodlife of the asset is 10 years.But…

Q: Mulroney Corp. is considering two mutually exclusive projects. Both require an initial investment of…

A: Initial investment (Present value of cash outflow) =$11300 at t=0WACC =8%Project XExpected life of 2…

Q: The initial investment of a project is OMR 30,000. The profit after interest and tax (Cash inflows)…

A: NPV is the sum of present value less initial investment

Q: Park Company is considering an investment of $38,000 that provides net cash flows of $13,800…

A: The payback period is a financial metric that measures the time it takes for an investment to…

Q: What is the present worth of the after-tax cash flows?

A: We have to use Modified Accelerated Cost Recovery SystemDepreciation will be as follows:Here…

Q: Maria Corporation Limited(MCL) is interested to invest in a project. The initial cost of the project…

A: Part 1: The computation of operating cash flows of the project by computing net income, adding…

Q: A 7-year project is expected to provide annual sales of $221,000 with costs of $97,500. The…

A: Sales in worst case  = current sales *  (100% - 15%)  = $221000 * (100% - 15%) = $187,850   Cost  =…

Q: The Wet Corp. has an investment project that will reduce expenses by $30,000 per year for 3 years.…

A: Has an investment project that will reduce expenses by $30,000 per year for 3 years. The project's…

Q: Consider an asset that costs $1,280,170 and is depreciated straight-line to 83,206 over its 14-year…

A: Cost of asset = 1,280,170 residual value = 83206  estimated life = 14 year annual depreciation =…

Q: 3a. Determine the payback period for each project. Note: No need excle formula, thank you

A: Pay back period is the length of time required to recover the cost of Investment. It is calculated…

Q: A project has the following cash in and out flows in its first year: Income generated:…

A: Income Generated = R100,000Cost of sales = R30,000Depreciation = R10,000Tax Rate = 27%

Q: How do I create an After tax Cash Flow Analysis?  Use rounded answers for subsequent calculations

A: Net present value is the difference between present value of cash inflows and present value of cash…

Q: An income-producing property is priced at $600,000 and is expected to generate the following…

A: The NPV will be the amount that is computed after finding the total of the discounted value of cash…

Q: An investment has the following annual cash flow 1st year- Php50,000 2nd year- Php 65.000 3rd year -…

A: ln Finance the Time value is considered to find out the present value and future value of cash flow.…

Q: A company anticipates a taxable cash expense of $80,000 in year 2 of a project. The company's tax…

A: Cash expense $80,000   Less: Tax benefit ($80,000 x 30%) $24,000   Net cash expense $56,000

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.