Elmdale Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in millions of dollars): (Click on the following icon in order to copy its contents into a spreadsheet.) Revenues COGS and Operating expenses other than depreciation Depreciation Increase in net working capital Capital expenditures Marginal corporate tax rate Year 1 103.7 43.3 26.1 3.9 30.4 a. What are the incremental earnings for this project for years 1 and 2? b. What are the free cash flows for this project for the first two years? a. What are the incremental earnings for this project for years 1 and 2? The incremental earnings for year 1 is $ 25% million. (Round to one decimal place.) million. (Round to one decimal place.) The incremental earnings for year 2 is $ b. What are the free cash flows for this project for the first two years? The free cash flow for year 1 is $ million. (Round to one decimal place.) million. (Round to one decimal place.) The free cash flow for year 2 is $ Year 2 156.5 40.1 33.2 7.4 40.8 25%

Elmdale Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in millions of dollars): (Click on the following icon in order to copy its contents into a spreadsheet.) Revenues COGS and Operating expenses other than depreciation Depreciation Increase in net working capital Capital expenditures Marginal corporate tax rate Year 1 103.7 43.3 26.1 3.9 30.4 a. What are the incremental earnings for this project for years 1 and 2? b. What are the free cash flows for this project for the first two years? a. What are the incremental earnings for this project for years 1 and 2? The incremental earnings for year 1 is $ 25% million. (Round to one decimal place.) million. (Round to one decimal place.) The incremental earnings for year 2 is $ b. What are the free cash flows for this project for the first two years? The free cash flow for year 1 is $ million. (Round to one decimal place.) million. (Round to one decimal place.) The free cash flow for year 2 is $ Year 2 156.5 40.1 33.2 7.4 40.8 25%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 20P

See similar textbooks

Similar questions

The Berndt Corporation expects to have sales of 12 million. Costs other than depreciation are expected to be 75% of sales, and depreciation is expected to be 1.5 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Berndts federal-plus-state tax rate is 40%. Berndt has no debt. a. Set up an income statement. What is Berndts expected net income? Its expected net cash flow? b. Suppose Congress changed the tax laws so that Berndts depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow? c. Now suppose that Congress changed the tax laws such that, instead of doubling Berndts depreciation, it was reduced by 50%. How would profit and net cash flow be affected? d. If this were your company, would you prefer Congress to cause your depreciation expense to be doubled or halved? Why?
Elmdale Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in millions of dollars): (Click on the following icon in order to copy its contents into a spreadsheet.) Revenues COGS and Operating expenses other than depreciation Depreciation Increase in net working capital Capital expenditures Marginal corporate tax rate Year 1 115.5 42.3 28.2 3.4 29.2 a. What are the incremental earnings for this project for years 1 and 2? b. What are the free cash flows for this project for the first two years? 28% a. What are the incremental earnings for this project for years 1 and 2? The incremental earnings for year 1 is $ million. (Round to one decimal place.) Year 2 155.7 63.7 35.7 8.5 42.5 28%
Elmdale Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in millions of dollars): (Click on the following icon in order to copy its contents into a spreadsheet.) Revenues COGS and Operating expenses other than depreciation Depreciation Increase in net working capital Capital expenditures Marginal corporate tax rate Year 1 101.2 48.1 22.7 3.1 31.6 a. What are the incremental earnings for this project for years 1 and 2? b. What are the free cash flows for this project for the first two years? 35% Year 2 160.1 38.1 35.2 7.8 40.6 35%
La Falaise Rouge Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in millions of dollars). Calculate the unlevered net income for Year 2. Revenues Costs of goods sold and operating expenses other than depreciation Depreciation Increase in networking capital Capital expenditures Marginal corporate tax rate Year 1 108 -36.6 -24.2 5.1 32.1 43% Year 2 156 -36.6 -38.6 8.9 42.5 43%
The Fleming Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 25 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Investment Sales revenue Operating costs Depreciation Net working capital spending Net income Cash flow $ Year 1 NPV 3,975 $ $ Year 0 Year O 34,000 $ 400 a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) Year 1 $ 17,500 3,700 8,500 450 Year 2 4,275 $ Year 1 5,300 $18,000 Year 2 Year 3 b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) Year 3 4,575 $ Year 2 3,800 3,900 8,500 8,500 500 400 $18,500 $15,500 3,100 8,500 ? Year 4 Year 4…
Etobicoke Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in milions of dollars) Revenues Operating Expenses (other than depreciation) CCA Increase in Net Working Capital Capital Expenditures Marginal Corporate Tax Rate S Year 1 S 121.2 47.6 21.2 S 3.3 30.3 35% Year 2 a What are the incremental earnings for this project for years 1 and 27 (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) b. What are the tree cash flows for this project for the first two years? O a Calculate the incremental earings for Year 1 of this project below. (Round to one decimal place.) Incremental Earnings Forecast (millions) Year 1 Sales Operating Expenses CCA EBIT Income tax at 35% Unlevered Net Income 152.7 56.2 42.9 8.1 36.6
The Fleming Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 23 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Investment Sales revenue Operating costs Depreciation Net working capital spending Net income $ Year 1 Year O 42,000 480 Year 1 Year 2 Year 3 Year 2 22,500, $21,500 $ 22,000$ 4,500 4,600 4,700 10,500 10,500 10,500 530 580 480 a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) Year 3 Year 4 Year 4 $19,500 3,900 10,500 ?
Etobicoke Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in millions of dollars): Revenues Operating Expenses (other than depreciation) CCA Increase in Net Working Capital Capital Expenditures Marginal Corporate Tax Rate Year 1 128.5 47.2 29.9 3.1 28.7 35% Year 2 155.5 63.7 34.1 8.9 41.6 35% a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) b. What are the free cash flows for this project for the first two years?
Help me please asap
Etobicoke Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in millions of dollars): Year 2 Revenues Operating Expenses (other than depreciation) CCA Increase in Net Working Capital Capital Expenditures Marginal Corporate Tax Rate Sales Operating Expenses CCA EBIT Income tax at 35% Unlevered Net Income $ a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) b. What are the free cash flows for this project for the first two years? $ Year 1 a. Calculate the incremental earnings for Year 1 of this project below: (Round to one decimal place.) Incremental Earnings Forecast (millions) $ 122.7 33.4 22.7 3.6 30.3 35% Year 1 166.6 52.1 43.2 8.5 41.7 35% O C
Rocky Mountains Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in millions of dollars): Year 1 Year 2 Revenues 130.0 175.0 Cost of goods sold and operating expenses other than depreciation 37.0 55.0 Depreciation 28.0 33.0 Increase in net working capital 4.5 7.5 Capital expenditures 32.0 44.0 Interest expenditures Marginal corporate tax rate 35% 35% a. What are the incremental earnings for this project for years 1 and 2? b. What are the free cash flows to the firm for this project for the first two years?
The Fancy Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 21 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Year 1 Year 2 a. Investment Sales revenue Operating costs Depreciation Net working capital spending 305 Year 0 $ 26,400 C. $ 13,500 2,950 6,600 205 Year 3 $15,100 3,125 4,300 6,600 6,600 235 $16,500 155 Year 4 $13,000 2,900 6,600 ? Compute the incremental net income of the investment for each year. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Compute the incremental cash flows of the investment for each year. (A negative amount should be b. indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number,…