For the next two questions, a "+" sign is optional for any answer that is a net cash inflow, but a "-" sign is mandatory for anyanswer that is a net cash outflow.Reebok Ltd is purchasing a $7.7 million machine, which will cost the firm an additional $46,000 to have themachine transported and installed ready for use. The machine is depreciated to a value of zero over a taxlife of 4 years via the straight-line method. It will also be worthless in the salvage market at this time. Themachine is expected to generate incremental revenues of $4.4 million per year for the firm while alsocausing incremental costs of $1.6 million per year. Reebok's marginal tax rate is 37.5%.You are forecasting incremental free cash flows for Reebok Ltd(a) What is the incremental free cash flow associated with the new machine at t=0?The free cash flow at t=0 will be $(Round your answer to the nearest dollar)(b) What is the annual incremental free cash flows each year from t=1 to t=4?The annual free cash flow from t=1 onward will be $(Round your answer to the nearest dollar)

The amount of cash available to a corporation after covering the costs of doing business is measured…

(a) What is the incremental free cash flow associated with the new machine at t=0? The free cash flow at t=0 will be $ (Round your answer to the nearest dollar) (b) What is the annual incremental free cash flows each year from t=1 to t=4? The annual free cash flow from t=1 onward will be $ (Round your answer to the nearest dollar)

(a) What is the incremental free cash flow associated with the new machine at t=0? The free cash flow at t=0 will be $ (Round your answer to the nearest dollar) (b) What is the annual incremental free cash flows each year from t=1 to t=4? The annual free cash flow from t=1 onward will be $ (Round your answer to the nearest dollar)

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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Similar questions

Consider the cash flow shown in the graph and assume that the interest rate is 10%. What is the value of X at to ensure that cash flow shown has a future value of $1,500,000? Answer to the closest dollar.
A sum of $10,000 now (time 0) is equivalent to the following cash flow diagram. What is the value of $B if the annual interest rate is 3%? Ⓡ $1,200 The value of $B is $ (Round to the nearest dollar.) $10,000 1 2 $1,200 3 Click the icon to view the interest and annuity table for discrete compounding when i = 3% per year. $2,000 $B 5 End of Year 6 37
d. Determine the minimum annual net cash flow necessary to generate a positive net present value, assuming a desired rate of return of 12%. Round to the nearest dollar.Annual Net Cash Flow fill in the blank 1 of 1$
2b. Compute the future value of a $100 cash flow for the same combinations of rates and times: (Round your answers to the nearest cent.) d. r = 4%, t = 20 years
Are there multiple IRRs for the following cash-flow sequence? How many are possible according to Descartes' rule of signs? If ε = 9% per year, what is the ERR for the cash flows of this project? Let MARR = 9% per year. ΕΟΥ 0 1 2 Cash Flow ($) 120 90 50 3 20 4 - 1,810 5 580 6 510 There is (are) multiple IRR(s) for the given cash-flow sequence. A maximum of two IRR value(s) is (are) suggested by the Descartes' rule of signs. The ERR for the cash flows of this project is%. (Round to two decimal places.) 7 410 8 330 9 180 10 110
You are trying to value the following project for your company. You know that the project will generate free cash flows in perpetuity that will grow at a constant annual rate of 1.5% after year 3. The applicable interest rate for this project is 7.5%. What is the NPV of this project? Express your result in $-millions and round to two decimals (do not include the $-symbol in your answer). If you calculate a negative NPV enter a negative number. Year Free Cash Flows Free Cash Flow Forecasts (in $-millions) 0 -130 Year 1 -1 2 3 24 37
A geometric gradient that increases at ? = 6% per year for 15 years is shown in the accompanying diagram. The annual interest rate is 12%. a.) What is the present equivalent value of this gradient? . b.) Draw a cash flow diagram
Find the present worth at time 0 of the chrome plating costs shown in the cash flow diagram. Assume i = 10% per year.
What is the present value of a perpetual stream of cash flows that pays $70,000 at the end of year one and then grows at a rate of 5% per year indefinitely? The rate of interest used to discount the cash flows is 11%. Question content area bottom Part 1 The present value of the growing perpetuity is $ enter your response here . (Round to the nearest cent.)
Consider a stream of cash flows, where you receive $2,000.00 per year for 20 yearsEXCEPT year 12 during which you receive only $1,000.00. If the current market rate ofinterest is 7.200% (compounded annually), then what is the present value of this stream ofuneven cash flows? Hint: there are several ways to solve this problem but see if you cansolve it using a single annuity formula.
Consider another set of net cash flows: Year Cash flow 0 1,500 1 2,000 2 0 3 1,500 4 3,000 5 4,000 What is the net present value of the stream if the opportunity cost of capital is 11 percent? What is the value of the stream at the end of year 5 if the cash flows are invested in an account that pays 11 percent annually? What cash flows today (time 0), in lieu of the 2,000 cash flow, would be needed to accumulate $20,000 at the end of year 5? (assume that the cash flows for years 1 through 5 remain the same.)
4. You have the expected cash flows for this machine as follows: Initial cost ($12,000), cash flow year 1 $5,000, year 2 $4,000, year 3, $ 6,000, year 4 $2,000. The required rate of return is 13%. The NPV is

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