Gator Bicycles just bought a new brake calibration machine that is expected to generate $36,000 in new revenues each ofthe next four years without increasing cash operating costs. The machine will be depreciated according to the MACRS 3-year class of assets, and its depreciable basis is $144,000. If Gator's marginal tax rate is 35 percent, what are the annualsupplemental operating cash flows attributed to the machine? Round your answers to the nearest dollar.show the Excel formulas and step-by-step processYear Supplemental operating CF1234$$$$

Operating cash flow is that amount which is earned by the investor from his investment. It includes…

Answered: Gator Bicycles just bought a new brake…

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

See similar textbooks

Similar questions

Stepwise
Stevie’s Sporting Goods is considering investing $33,000 in a new machine. The machine is expected to last five years and have a salvage value of $8,000. Annual after-tax net cash inflow from the machine is expected to be $7,000. Calculate the accounting rate of return (aka the unadjusted rate of return). (Enter your answer as a percentage rounded to one decimal place, but do NOT include the percentage sign. For example: 5 divided by 35 is 0.142857, which you would enter as “14.3”)
The owner of a bicycle repair shop forecasts revenues of $240,000 a year. Variable costs will be $70,000, and rental costs for the shop are $50,000 a year. Depreciation on the repair tools will be $30,000. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. Calculate the operating cash flow for the repair shop using the three methods given below: Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield.
Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $32,000 and will be depreciated straight- line over 3 years. It will be sold for scrap metal after 5 years for $8,000. The grill will have no effect on revenues but will save Johnny's $16,000 in energy expenses. The tax rate is 30%. Required: a. What are the operating cash flows in each year? b. What are the total cash flows in each year? c. Assuming the discount rate is 12%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased? Complete this question by entering your answers in the tabs below. Required A Required B Required C What are the operating cash flows in each year? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Year 1 2 3 Operating Cash Flows
Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $19,000 and will be depreciated straight-line over 7 years to a salvage value of zero. The grill will have no effect on revenues, but will save Johnny's $20,000 in energy expenses. The tax rate is 31 percent. What are the operating cash flows in years 1 to 7? Enter your answer below. Number
Let's say you are going to be an Uber driver and want to estimate your annual operating after tax cash flows. Assume the following annual estimates: -trip revenue of $20,000 -depreciation expense of $1,000 -gas and maintenance of $3,000 -insurance of $900 -tax rate of 25% - 5 year project - 10% discount rate - for sake of calculation ease, all cash flows occur on the last day of the year. What is the present value of your OCF? $61,031 $49,565 $36,861 $57,240 $28,000
Daily Enterprises is purchasing a $10.2 million machine. It will cost $51,000 to transport and install the machine. The machine has a depreciable life of five years and will have no salvage value. The machine will generate incremental revenues of $3.9 million per year along with incremental costs of $1.5 million per year. If Daily's marginal tax rate is 21%, what are the incremental earnings (net income) associated with the new machine? The annual incremental earnings are $ (Round to the nearest dollar.)
The owner of a bicycle repair shop forecasts revenues of $160,000 a year. Variable costs will be $50,000, and rental costs for the shop are $30,000 a year. Depreciation on the repair tools will be $10,000. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. Calculate the operating cash flow for the repair shop using the three methods given below: Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield.
Colsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The assets required for the project were fully depreciated at the time of purchase. The financial staff has collected the following information on the project: Sales revenues $20 million Operating costs 16 million Interest expense 2 million The company has a 25% tax rate, and its WACC is 13%. Write out your answers completely. For example, 13 million should be entered as 13,000,000. What is the project's operating cash flow for the first year (t = 1)? Round your answer to the nearest dollar.$ If this project would cannibalize other projects by $1.5 million of cash flow before taxes per year, how would this change your answer to part a? Round your answer to the nearest dollar.The firm's OCF would now be $ .
The owner of a bicycle repair shop forecasts revenues of $220,000 a year. Variable costs will be $65,000, and rental costs for the shop are $45,000 a year. Depreciation on the repair tools will be $25,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. Depreciation Pretax profit INCOME STATEMENT 0 $ 0 b. Calculate the operating cash flow for the repair shop using the three methods given below. i. Dollars in minus dollars out. ii. Adjusted accounting profits. iii. Add back depreciation tax shield. Methods of Calculation i. Dollars in Minus Dollars Out ii. Adjusted Accounting profits iii. Add back depreciation tax shield Operating Cash Flow
Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $29,000 and will be depreciated straight-line over 8 years to a salvage value of zero. The grill will have no effect on revenues, but will save Johnny's $13,000 in energy expenses. The tax rate is 37 percent. What are the operating cash flows in years 1 to 8?

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS