a project with the life of six years is expected to provide annual sales of $300,000 and cost $25,000 the project will require an investment in equipment of $550,000 which will be depreciated on a straight line method over the life of the project you feel that both sides and costs are accurate to plus or minus 15%, the tax rate is 21%, what is the annual operating cash flow for the best case scenario a $154, 143 b 102, 450c 48, 217 d122, 000 42 or e104, 967

a project with the life of six years is expected to provide annual sales of $300,000 and cost $25,000 the project will require an investment in equipment of $550,000 which will be depreciated on a straight line method over the life of the project you feel that both sides and costs are accurate to plus or minus 15%, the tax rate is 21%, what is the annual operating cash flow for the best case scenario a $154, 143 b 102, 450c 48, 217 d122, 000 42 or e104, 967

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 9-year project is expected to provide annual sales of $161,000 with costs of $90,000. The equipment necessary for the project will cost $285,000 and will be depreciated on a straight- line method over the life of the project. You feel that both sales and costs are accurate to +/ -10 percent. The tax rate is 21 percent. What is the annual operating cash flow for the worst- case scenario? Multiple Choice о $29,835 $42,911 $27,148 $73,548 $44,718
A project will cost $100,000 and will last 5 years with no salvage value: Revenues Sales Operating Expenses: Rent Expense Depreciation Expense Miscellaneous Expense Total Expenses Net Income $70,000 $30,000 10,000 8,000 48,000 $22,000 Instructions a. Calculate the expected annual rate of return on this project showing calculations to support your answer. b. Calculate the cash payback on this project showing calculations to support your answer.
The cash flow estimates of a project are shown in the table below, and the MARR is 6% per year. Of the following three relations, the correct one to calculate the annual worth of this project is: Cash Flow First cost, S Annual cost, S per year Revenue, S per year Salvage value, S Life, years -200 -50 120 25 10 Relation 1: AW=-200(A/P,6%,10)+70+25(A/F,6%,10) Relation 2: AW=[-200-50(P/A,6%,10)+120(P/A,6%,10)+25(P/F,6%,10)|(A/P,6%,10) Relation 3: AW=-200(F/P,6%,10)+25+(-50+120)(A/P,6%,10) O Relation 1 and 3 OARelation 1 and 2 O Only Relation 1 O Only Relation 3
Spiritlight Ventures is considering the following investment: Investment $140,000 Annual revenues $ 96,000 Annual variable costs $ 32,000 Annual fixed out-of-pocket costs $ 20,000 Salvage value $ 12,000 Discount rate 12% Expected life of project 8 years Ignore income taxes. The present value of the annual cash flow (rounded) is a.$152,538. b.$136,822. c.$204,884. d.$218,592.
Why straight-line depreciation method is used instead of the sinking fund depreciation method?
Hh.27.
Project A requires an original investment of $66,800. The project will yield cash flows of $19,800 per year for 4 years. Project B has a computed net present value of $3,090 over a 4-year life. Project A could be sold at the end of 4 years for a price of $16,000. Following is a table for the present value of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Following is a table for the present value of an annuity of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Use the tables above. a. Determine the net present value of Project A over a 4-year life with salvage value assuming a minimum rate of return of 12%. Round your answer to two decimal places.$fill in the blank 1 b. Which project provides…
A project has the following cash in and out flows in its first year: Income generated: R100 000 Cost of sales R30 000 Depreciation R10 000 What would the tax payable for the first year of the project be if the tax rate is 27%?
Project A requires an original investment of $53,400. The project will yield cash flows of $15,400 per year for 4 years. Project B has a computed net present value of $2,990 over a 4-year life. Project A could be sold at the end of 4 years for a price of $14,900. Following is a table for the present value of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Following is a table for the present value of an annuity of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Use the tables above. a. Determine the net present value of Project A over a 4-year life with salvage value assuming a minimum rate of return of 12%. Round your answer to two decimal places.$fill in the blank 1 b. Which project provides…
What is the NPV of a project that costs $100,000 provides $23,000 in cash flows annually for 6 years, requires a $5,000 increase in net working capital, and depreciates the asset straight-line over 6 years? The discount rate is 14% a) - $15,560.04 b) $14,782.09 c) -$13,282.71 d) $3,411.14
Project Phoenix costs $1.25 million and yields annual cost savings of $300,000 for seven years. The assets involved in the project can be salvaged for $100,000 at the end of the project. Ignoring taxes, what is the payback period for Project Phoenix? Select one: a. 4 years b. 4 years and 1.7 months c. 4 years and 2 months d. 4 years and 3 months e. 5 years
Given the following, calculate the project's cash flows, NPV, and IRR. Initial investment $325,000 Expected life is 5 years First Year Revenues: 145,000 First-Year Expenses: $65,000 • Growth for revenue and expenses: 4.5 percent per year Straight Line Depreciation over 5 years Salvage Value: $50,000 One-time net working capital investment of $10,000 is required at the start of the project and will be recovered at project end The tax rate is 34 percent The risk-free rate is 4 percent Beta is 1.1 • The expected market return is 8 percent Answer the following: ● ● ● ● ● ● ● ● ● What are the cash flows for each year? What is the NPV? What is the IRR?

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