Problem #4: Budgets "UMPI Inc. is considering the purchase of a street paver machine for$225,000. The expected life of the machine will be three years, and it will have a salvage valueof $25,000. Annual maintenance costs will total $7,500. Annual savings are predicted to be$92,500. The company's required rate of return is 8%. Ignoring the TVM, calculate the net cashinflow or outflow resulting from this investment opportunity. Be sure to prepare a schedule thatclearly depicts the time frame of the cash flows. 1) Using the Present Value Factors for $1 at 8%noted above (table provided for reference), calculate the net present value of this investment(ignoring taxes) 2) Based on your answer in requirement 1: should UMPI purchase the streetpaver machine.Factors: Present Value of $1 (r=8%)Year 01.0000Year 10.9259Year 20.8573Year 30.7938

The objective of this question is to determine whether UMPI Inc. should purchase the street paver…

Answered: Problem #4: Budgets "UMPI Inc. is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Epiphany Industries is considering a new capital budgeting project that will last for three years. Epiphany plans on using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental cash flow projects: Year Sales (Revenues) Cost of Goods Sold (50% of Sales) - Depreciation = EBIT - Taxes (20%) = unlevered net income - 0 OA. $37,500 OB. $60,000 OC. $50,000 O D. $70,000 1 125,000 62,500 25,000 37,500 7,500 30,000 25,000 - 5000 + Depreciation + changes to working capital - capital expenditures - 90,000 The free cash flow for the first year of Epiphany's project is closest to: 2 125,000 62,500 25,000 37,500 7,500 30,000 25,000 -5000 3 125,000 62,500 25,000 37,500 7,500 30,000 25,000 -5000
appy Dog Soap Company is considering investing $3,000,000 in a project that is expected to generate the following net cash flows:YearCash FlowYear 1 $275,000Year 2 $400,000Year 3 $425,000Year 4 $475,000Happy Dog Soap Company uses a WACC of 7% when evaluating proposed capital budgeting projects. Based on these cash flows, determine this project’s PI (rounded to four decimal places): 0.5263 0.4167 0.4605 0.4386
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Please give me answer very fast in 5 min saur
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Can I get the answers to 10.11 and 10.12.
Cash flows estimation and capital budgeting:You are the head of finance department in XYZ Company. You are considering adding a new machine to your production facility. The new machine’s base price is $10,800.00, and it would cost another $2,760.00 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after three years for $2,350.00. The machine would require an increase in net working capital (inventory) of $800.00. The new machine would not change revenues, but it is expected to save the firm $23,845.00 per year in before-tax operating costs, mainly labor. XYZ's marginal tax rate is 35.00%. a. What is the initial cash outlay? b. What is the free cash flow for year 1? c. What is the additional Year-3 cash flow (i.e, the after-tax salvage and the return of working capital – also called terminal value)? (please show your work in details and highlight your answers)

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