What is free cash flow for the financial accounting? Based on the following, what is free cash flow?Cash from Operations: $230,000Cash from Investing: $(80,000)Cash from Financing: $45,000Operations includes $15,000 for depreciation. Investingincludes the purchase of a new manufacturing equipmentfor $180,000 and the sale of outdated equipment for$100,000. Financing is made up of $95,000 of new loanproceeds and $50,000 of dividends paid.

Step 1: Define Free Cash Flow (FCF)Free Cash Flow (FCF) represents the cash available for a company…

Answered: Based on the following, what is free…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 6CE

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You are given the following information. What is the initial cash outflow? Purchase and installation of new equipment $12,000 Sale price of replaced equipment $ 6,000 Book value of replaced equipment $ 3,000 When the new equipment is installed: Inventory increase $ 2,000 Accounts payable increase $ 1,000 Tax rate 40% Group of answer choices $7,400 $11,000 $7,000 $8,600
Door to Door Moving Company is considering purchasing new equipment that costs $734,000. Its management estimates that the equipment will generate cash inflows as follows: Year 1 2 3 4 5 $204,000 204,000 262,000 262,000 158,000 Present value of $1: 6% 1 2 3 4 5 0.943 0.890 0.840 0.792 0.747 7% A. $36,312 B. $886,000 OC. $871,928 OD. $786,000 0.935 0.873 0.816 0.763 0.713 8% 0.926 0.857 0.794 0.735 0.681 9% 0.917 0.842 0.772 0.708 0.650 10% 0.909 0.826 0.751 0.683 0.621 The company's annual required rate of return is 8%. Using the factors in the table, calculate the present value of the cash inflows. (Round all calculations to the nearest whole dollar.)
A company is considering the purchase of a universal grinding machine. The following table sets out a forecast of the annual accounting profit: Revenues $ 412,000 CostsaFootnote a 288,000 Pretax profit 124,000 Tax at 25% 31,000 After-tax profit $ 93,000 aFootnote aNote: costs include depreciation of $84,000. Calculate the operating cash flow using the three methods set out in Equations (6.3A), (6.3B), and (6.3C).
Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.
The company is considering three capital investment proposals. At this time the company only has funds available to pursue one of the three investments. Equipment A Equipment B Equipment CPresent value of net cash inflows $1,695,000 $1,960,000 $2,200,000Initial investment ($1,500,000) ($1,750,000) ($2,000,000)Net present value $195,000 $210,000 $200,000*initial investment is the amount invested A. Calculate the Present value index (or profitability index) for each project. B. Which investment should they choose and why?
Ironwood Charities is considering an investment in one of their buildings that is expected to return the following cash flows: Use Exhibit A.8. Year 1 4Nm & in 2 3 4 5 Net Cash Flow $ 15,000 27,000 43,000 58,000 48,000 This schedule includes all cash inflows from the project, which will also require an immediate $152,000 cash outlay. The organization is tax-exempt; therefore, taxes need not be considered. Required: a. What is the net present value of the project if the appropriate discount rate is 8 percent? b. What is the net present value of the project if the appropriate discount rate is 4 percent? Complete this question by entering your answers in the tabs below. Required A Required B What is the net present value of the project if the appropriate discount rate is 8 percent? Note: Round PV factor to 3 decimal places. Negative amount should be indicated by a minus sign. Net present value
The following data pertain to an investment currently being considered by Kalamazoo Corporation: Investment in the project: $14,000 Net annual cash inflows: 2,800 Working capital: 5,000 Salvage value: 1,000 Life of the project: 10 years The working capital would be released for use elsewhere when the project is completed. What is the net present value of the project, using a discount rate of 8% $2,566 ($251) $251 $5,251
The information below relates to the purchase of equipment: investment in the project: $10,000 Net annual cash inflows: 2,400 Working capital required: 5,000 Salvage value of the equipment: 1,000 Life of the project: 8 years At the completion of the project, the working capital will be released for use elsewhere. Compute the net present value of the project, using a discount rate of 10% $606 $8,271 ($1,729) $1,729
Consider the following information: Initial cost of equipment $108,000 Sales tax and delivery costs $7,000 Estimated life 7 years Salvage value $11,000 Annual cash inflows $31,000 Estimated cost of capital 10% Without considering the effect of income taxes, the net present value of the equipment is: O $39.921.
QUESTION S Home Express Moving Company is considering purchasing new equipment that costs $728.000. ts management estmates that the equipment will generate cash inflows of $50,000 semiannually for its 2 year life. Present value of $1: 6% 7% 8% 9% 0.917 0.842 10% 0.909 0.826 0.943 0.935 0.926 0.857 0.794 0.873 0.890 0.840 0.792 0.747 2. 0.751 0.683 0.621 3 0.816 0.772 0.708 0.735 0.681 4 0.763 5. 0.713 0.650 The company's annual required rate of return is 14% Using the factors in the table, calculate the present value of the cash flows O $235,750 O $152,600 O $100,000 O $200,000
Harrison, Inc. is considering two investment opportunities. Each investment costs $7,000 and will provide the same total future cash inflows. The schedule of estimated cash receipts for each investment follows (assume cash is received at year-end): 16. 17. b. C. Year 1 Year 2 Year 3 Year 4 Total d. Which investment should Harrison choose assuming all other variables for the two investments are the same? a. Investment 1 $3,000 2,500 2,000 1,500 $9,000 Investment 2 $1,000 2,000 3,000 3,000 $9,000 Harrison should be indifferent between the two investments because they provide the same total cash inflows. Harrison should choose Investment I because of the time value of money. Harrison should be indifferent between the two investments because the initial cash outflow is the same. Harrison should choose Investment II because it generates larger cash inflows at the end of the investment's useful life. C. $926 d. $7,227 Assuming an 8% minimum rate of return, what is the net present value of…

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