$280,000. The initial cost year tax life, but has A company is considering a project that will cost will be depreciated to zero over the project's 10 an estimated market value of $20,000 at the end of the project. The project will generate annual cash revenues of $196,000 and have annual operating cost of $118,000. An initial working capital investment of $ 8,500 will be released at the end of the project. The company's required return is 13% and it has a 30% tax rate. What is the project's initial cash flow (T)? What is the project's annual operating cash flow? What is the net cash flow in the final year of the project? What is the project's NPV?
$280,000. The initial cost year tax life, but has A company is considering a project that will cost will be depreciated to zero over the project's 10 an estimated market value of $20,000 at the end of the project. The project will generate annual cash revenues of $196,000 and have annual operating cost of $118,000. An initial working capital investment of $ 8,500 will be released at the end of the project. The company's required return is 13% and it has a 30% tax rate. What is the project's initial cash flow (T)? What is the project's annual operating cash flow? What is the net cash flow in the final year of the project? What is the project's NPV?
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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Transcribed Image Text:A company is considering a project that will cost $280,000. The initial cost
will be depreciated to zero over the project's 10 year tax life, but has
an estimated market value of $20,000 at the end of the project.
The project will generate annual cash revenues of $196,000 and have annual
operating cost of $118,000. An initial working capital investment of $ 8,500
will be released at the end of the project. The company's required return is 13%
and it has a 30% tax rate.
What is the project's initial cash flow (T)?
What is the project's annual operating cash flow?
What is the net cash flow in the final year of the project?
What is the project's NPV?
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