Question listQuestion 1Question 2Question 3Question 4O Question 5O Question 6Question 7Question 8(Calculating changes in net operating working capital) Duncan Motors is introducing a new product and has an expected change in net operating income of $290,000. DuncanMotors has a 36 percent marginal tax rate. This project will also produce $51,000 of depreciation per year. In addition, this project will cause the following changes in year 1:Without the Project$34,00027.00053,000With the Project$20,00036.00091,000Accounts receivableInventoryAccounts payable(Click on the loon in order to copy ds contents into a spreadsheer)What is the project's free cash flow in year 17The free cash flow of the project in year 1 is $. (Round to the nearest dolar)Help me solve this View an example Get more help.COLDClear allCheck answer

Net operating Income= Operating Income * (1-Tax rate)While Calculating Free Cash flow,Decrease in…

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EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 6P

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Racin’ Scooters is introducing a new product and has an expected change in EBIT of $475,000. Racin’ Scooters has a 21 percent marginal tax rate. Bonus depreciation will be $250,000 in year 1. In addition, the project will cause the following changes in year 1: WITHOUT THE PROJECT WITH THE PROJECTAccounts receivable $45,000 $63,000Inventory 65,000 80,000Accounts payable 70,000 94,000
Calculating changes in net operating working capital) Duncan Motors is introducing a new product and has an expected change in net operating income of $300,000. Duncan Motors has a 34 percent marginal tax rate. This project will also produce $50,000 of depreciation per year. In addition, this project will cause the following changes in year 1: Without the Project With the ProjectAccounts receivable $33,000 $23,000Inventory $25,000 $40,000Accounts payable $50,000 $86,000 The free cash flow of the project in year 1 is $ (Round to the nearest dollar.)
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Use excel The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $238,000 and cash expenses by $184,000. The initial investment will require $96,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 6-year life of the project. The company has a marginal tax rate of 32 percent. What is the annual value of the depreciation tax shield?
Project Section 1: You are considering buying an industrial equipment whose price is 445000. The equipment is expected to earn an annual revenue of $150,000. The equipment will be depreciated under MACRS as a five-year recovery property. The equipment will be used for seven years, at the end of which time, you can sell it for $50,000. Your company's marginal tax rate is 35% over the project period. Perform the following: a) Determine the net after-tax cash flows for each period over the project life. b) Net present worth assuming company MARR 15% . c) Annual equivalent cash flow company MARR 15%. = =
A new investment has projected sales of $450,000. Costs of goods sold are 40% of sales, and fixed costs are $100,000. The depreciation expense is $75,000. Assume a tax rate of 40%. What is the (after-tax) net income? Note: please write down the answer to this question, which is needed for the next question. $57,000 $95,000 $38,000 $61,750
Esc You consider purchasing a new piece of equipment (7yr MACRS property) for your manufacturing process for $120,000. The equipment has a 6-year useful life and no salvage value. The equipment is expected to generate an additional $40,000 of net income before taxes and depreciation each year by using this upgraded system. The combined federal and state income tax rate= 35%. Annual inflation = 4%. a. Fill in the following table assuming MACRS depreciation rates Year 46°F Rain showers 0 1 F1 2 O 2 3 4 5 Pretax income 6 MACRS Taxable Depreciation income F2 - F3 + F4 Ⓡ b. If your MARR = 12%, should you purchase this system based on your real after-tax income? Why or why not? F5 8 C B Tax owed F6 Q Search G After tax income F7 Ca 7 F8 O Inflation adjustment factor O F9 ala LG F10 Real after tax income 0 A I THE F11 - 0 1 asod F12 + Prt Sc ScrLk Post-it sod Ins Post-it Del Backspace Post-it PgUp Home asod> Post-it Mumi 1-10 PgOn End Pause Break 11-15 11-15 C
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Your company, RMU Inc., is considering a new project whose data are shown below. Under the new tax law, the equipment used in the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. What is the project's Year 1 cash flow? Sales revenues $26,750 Operating costs $13,511 Tax rate 25.0%

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