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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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
METL is evaluating a project projected to have a 7-year life. The initial investment of $4.2 million will be depreciated to zero using straight-line over the project life. The project is expected to create incremental sales of $2.4 million per year and incremental expenses of $1.4 million per year. What is the incremental after-tax operating cash flow (OCF) associated with this project if METL's tax rate is 32%? Enter answer in dollars, rounded to the nearest dollar.
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?
A project will produce an operating cash flow of $18,000 a year for 8 years. The initial fixed asset investment in the project will be $75,000. The net aftertax salvage value is estimated at $11,250 and will be received during the last year of the project's life. What is the IRR? A. 18.57% B. 16.71% C. 17.08% D. 18.94% E. 17.83%

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