What is the opereting cash now for this project? Electrical is evaluating a project which will increase salesby $30,000. The project will cost $150,000 and will bedepreciated straight-line to a zero book value over the 10year line of the project. The applicable tax rate is 34%. Whatis the operating cash now for this project?1. A. $3,3002. B. $8,3003. C. $5,0004. D. $13,3005. E. 18,300

Step 1: Given Value for Calculation Sales Increase = si = $30,000Cost of project = c = $150,000Time…

Answered: Electrical is evaluating a project…

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 22E

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Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in year two, $2,000 in year three. $2,500 in year four, and $2,000 in year five. What is the NPV using 8% as the discount rate? For further instructions on net present value in Excel, see Appendix C.
A project will increase sales by $60,000 and cash expenses by $51,000. The project will cost $40,000 and will be depreciated using straight- line depreciation to a zero book value over the 4-year life of the project. The company has a marginal tax rate of 35%. What is the operating cash flow of the project using the tax shield approach? O $9,350 O $9,700 O $8,650 O $5,850
A project’s after-tax operating cash flow is $200,000 per year, with operating costs of $100,000 and depreciation of $20,000 per year. The firm’s marginal tax rate is 40%. What are the annual sales revenues from this project (rounded to the nearest dollar)? Select one: a. $200,000 b. $377,143 c. $394,286 d. $420,000 e. $640,000
you are trying to decide whether to accept or reject a one-year project. The project is estimated to generate $5,000 in incremental gross profit, which includes $200 in depreciation. Incremental SG&A expense is $400. At a 35% tax rate,what would be the after-tax incremental cash flow ?
A project has annual NPV break-even level of sales of $3,000,000. The annual net cash flows can be calculated as (0.16 x sales- $392,000). The project has a 5-year life and the company's cost of capital is 8.70%. Ignoring the impact of depreciation and taxes, what is the most that should be invested in this project today? a. $229,980 b. $1,320,000 C. $440,000 d. $344,970 e. $880,000
A cost-cutting project will decrease costs by $68,300 a year. The annual depreciation will be $17,400 and the tax rate is 21 percent. What is the operating cash flow for this project? Multiple Choice о о о о $17,815 $38,305 $44,395 $57,611 $29,995
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You are analyzing a project and have developed the following estimates. The depreciation is $7,600 a year and the tax rate is 34 percent. What is the worst-case operating cash flow? Unit sales Sales price Variable cost Fixed costs TTT Base Case 3.100 $19 $12 $8.200 Lower Bound 2,500 $16 $10 $7.800 Upper Bound 3,400 $22 $14 $8.500 per unit O 1) -$1,311 O 2) -$641 3) $274 4) $1,206
The Wet Corp. has an investment project that will reduce expenses by $30,000 per year for 3 years. The project's cost is $35,000. If the asset is part of the 3-year MACRS category (33.33% first year depreciation) and the company's combined tax rate is 33%, what is the cash flow from the project in year 1? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.) Multiple Choice $23,400 $24,730 $23,950 $25,410
company is considering taking a project that will produce $12 million of revenue per year. Cash expenses will be $5 million, and depreciation expenses will be $1 million per year. If the company takes that project, then it will reduce the cash revenues of an existing project by $2 million. What is the free cash flow on the project, per year, if the company is in the 40 percent marginal tax rate? $2.4 million $3.4 million $4.6 million $5.0 million
A project will reduce costs by $42,700 but increase depreciation by $21,100. What is the operating cash flow if the tax rate is 25 percent? Multiple Choice $47,850 $37,300 $32,025 $15,950 $26,500

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