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K Question 7, Problem 9-18ab Part 1 of 4 HW Score: 65.48%, 7.86 of 12 points ○ Points: 0 of 1 Save Buhler Industries is a farm implement manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightweight tractors. Buhler plans to use a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incomplete incremental free cash flow projections (in millions of dollars): Free Cash Flow ($000,000s) Revenues - Manufacturing expenses (other than depreciation) -Marketing expenses - CCA = EBIT - Taxes (35%) Unlevered net income + CCA Year 0 Years 1-9 Year 10 116.00 116.00 -36.00 -36.00 - 8.00 -8.00 ? ? ? ? ? ? ? ? ? ? -Increases in net working capital - 5.00 - 5.00 Using the indirect method requires a separate calculation of the CCA tax shield. What is the present value of the CCA tax shield? The present value of the CCA tax shield is $ million. (Round to two decimal places.)

K Question 7, Problem 9-18ab Part 1 of 4 HW Score: 65.48%, 7.86 of 12 points ○ Points: 0 of 1 Save Buhler Industries is a farm implement manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightweight tractors. Buhler plans to use a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incomplete incremental free cash flow projections (in millions of dollars): Free Cash Flow ($000,000s) Revenues - Manufacturing expenses (other than depreciation) -Marketing expenses - CCA = EBIT - Taxes (35%) Unlevered net income + CCA Year 0 Years 1-9 Year 10 116.00 116.00 -36.00 -36.00 - 8.00 -8.00 ? ? ? ? ? ? ? ? ? ? -Increases in net working capital - 5.00 - 5.00 Using the indirect method requires a separate calculation of the CCA tax shield. What is the present value of the CCA tax shield? The present value of the CCA tax shield is $ million. (Round to two decimal places.)

Essentials Of Investments
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
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K Question 7, Problem 9-18ab Part 1 of 4 HW Score: 65.48%, 7.86 of 12 points ○ Points: 0 of 1 Save Buhler Industries is a farm implement manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightweight tractors. Buhler plans to use a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incomplete incremental free cash flow projections (in millions of dollars): Free Cash Flow ($000,000s) Revenues - Manufacturing expenses (other than depreciation) -Marketing expenses - CCA = EBIT - Taxes (35%) Unlevered net income + CCA Year 0 Years 1-9 Year 10 116.00 116.00 -36.00 -36.00 - 8.00 -8.00 ? ? ? ? ? ? ? ? ? ? -Increases in net working capital - 5.00 - 5.00 Using the indirect method requires a separate calculation of the CCA tax shield. What is the present value of the CCA tax shield? The present value of the CCA tax shield is $ million. (Round to two decimal places.)
Transcribed Image Text:K Question 7, Problem 9-18ab Part 1 of 4 HW Score: 65.48%, 7.86 of 12 points ○ Points: 0 of 1 Save Buhler Industries is a farm implement manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightweight tractors. Buhler plans to use a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incomplete incremental free cash flow projections (in millions of dollars): Free Cash Flow ($000,000s) Revenues - Manufacturing expenses (other than depreciation) -Marketing expenses - CCA = EBIT - Taxes (35%) Unlevered net income + CCA Year 0 Years 1-9 Year 10 116.00 116.00 -36.00 -36.00 - 8.00 -8.00 ? ? ? ? ? ? ? ? ? ? -Increases in net working capital - 5.00 - 5.00 Using the indirect method requires a separate calculation of the CCA tax shield. What is the present value of the CCA tax shield? The present value of the CCA tax shield is $ million. (Round to two decimal places.)
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