Athletics Company has a potential new project that is expected to generate annual revenues of $266,600, withvariable costs of $146,000, and fixed costs of $62,800. To finance the new project, the company will need toissue new debt that will have an annual interest expense of $27,000. The annual depreciation is $26,200 andthe tax rate is 21 percent. What is the annual operating cash flow?$183,416$51,164$84,000$41,280$131,080

Earnings before interest and taxes (EBIT) = Total annual revenues - Variable costs - Fixed costs…

Answered: Athletics Company has a potential new…

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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Bennett Company has a potential new project that is expected to generate annual revenues of $263,000, with variable costs of $144, 400, and fixed costs of $61,600. To finance the new project, the company will need to issue new debt that will have an annual interest expense of $25,000. The annual depreciation is $25,400 and the tax rate is 35 percent. What is the annual operating cash flow? Multiple Choice $127,490 $82,400 $180,212 $45,940 $40,890
The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales $22 million Operating costs (not including depreciation) $11 million Depreciation $5 million Interest expense $3 million The company faces a 25% tax rate. What is the project's operating cash flow for the first year (t = 1)? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar. $
The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales $22 million Operating costs (not including depreciation) $9 million Depreciation $5 million Interest expense $3 million The company faces a 25% tax rate. What is the project's operating cash flow for the first year (t = 1)? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar.
A new project is expected to generate $906,152 in revenues, $352,538 in cash operating expenses, and depreciation expense of $166,547 in each year of its 8-year life. The corporation's tax rate is 34%. The project will require an increase in net working capital of $89,880 at the outset and a decrease in net working capital of $70,745 in year 8. What is the operating free cash flow from the project in the first year, to the nearest dollar?
16. A 6-year project is expected to generate annual sales of 8,900 units at a price of $76 per unit and a variable cost of $47 per unit. The equipment necessary for the project will cost $317,000 and will be depreciated on a straight-line basis over the life of the project. Fixed costs are $190,000 per year and the tax rate is 25 percent. How sensitive is the operating cash flow to a $1 change in the per unit sales price? $4,609 $6,007 $4,142 $5,075 $6,675
Chase Brew Inc is considering an investment with the following information: initial investment in assets = $1,600,000 to be depreciated to $0 via straight-line method over 8-year project life sales will increase by $1,750,000/year expenses will increase by $1,240,000/year firm's marginal tax rate is 28% What is the incremental after-tax cash flow (OCF) per year associated with the following project? Enter answer in dollars, rounded to the nearest dollar.
ABC, Inc., is considering purchase of a new equipment. The expected sales are expected to be $5,556,982. The annual cash operating expenses are expected to be $2,957,536. The annual depreciation is estimated to be $456,926 and the interest expense is estimated to be $206,975. If the tax rate is 33%, what is the operating cash flow?
A two-year project has sales of $582,960, cash costs of $411,015, and depreciation expense of $68,109. The tax rate is 24 percent and the discount rate is 12 percent. What is the amount of the annual depreciation tax shield? O $23,606.67 O $16,346.16 O $47,213.34 O $26,210.01 A Moving to another question will save this response. Question 12 of 30
A project’s annual revenues will be $50,000 the first year and will decrease by $1500 per year over its 20-year life. If the firm’s interest rate is 12%, what is the project’s present worth? (a) $305,998 (b) $373,450 (c) $384,654 (d) $440,902.
A project is expected to generate annual revenues of $ 119, 300, with variable costs of $75, 400, and fixed costs of $15,900. The annual depreciation is $3,950 and the tax rate is 34 percent. What is the annual operating cash flow? Multiple Choice $61, 143 $19, 823 $45, 243 $ 28,000 $31,950
A project will increase sales by $184,500 and cash expenses by $88,900. The project will require investment in equipment of $53,000 and be depreciated using straight line depreciation to a zero book value over the four-year life of the project. The company has a marginal tax rate of 21 percent. What is the operating cash flow of the project? $108,552.25 None of these options are correct o $78,306.50 $75,524.00 o $95,600.00
A project costs $65,000, will be depreciated straight-line to zero over its 4 year life, and will require a net working capital investment of $5,000 up-front. The firm has a tax rate of 35% and a required return of 15%. The project generates an annual operating cash flow (OCF) of $22,000. What is the project's NPV? $-2,190.48 $-26,315.04 $+5,089.72 $-4,331.71 $-7,190.48

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