Revenues generated by a new fad product are forecast as follows: Year 1 2 4 Revenues $33,981 40,000 20,000 10,000 Thereafter O Expenses are expected to be 50% of revenues, and working capital required in each year is expected to be 20% of revenues in the following year. The product requires an immediate investment of $40,000 in plant and equipment that will be depreciated using the straight-line method over 5 years. The firm recently spent $2,000 on a study to estimate the revenues of the new product. The tax rate is 20%. What is the operating cash flow in year 1? Answer to nearest whole dollar amount. 15,192

Revenues generated by a new fad product are forecast as follows: Year 1 2 4 Revenues $33,981 40,000 20,000 10,000 Thereafter O Expenses are expected to be 50% of revenues, and working capital required in each year is expected to be 20% of revenues in the following year. The product requires an immediate investment of $40,000 in plant and equipment that will be depreciated using the straight-line method over 5 years. The firm recently spent $2,000 on a study to estimate the revenues of the new product. The tax rate is 20%. What is the operating cash flow in year 1? Answer to nearest whole dollar amount. 15,192

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

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Revenues generated by a new fad product are forecast as follows: Year 1 2 3 4 Revenues $66,973 40,000 20,000 10,000 Thereafter O Expenses are expected to be 50% of revenues, and working capital required in each year is expected to be 20% of revenues in the following year. The product requires an immediate investment of $40,000 in plant and equipment that will be depreciated using the straight-line method over 5 years. The firm recently spent $2,000 on a study to estimate the revenues of the new product. The tax rate is 20%. What is the operating cash flow in year 1? Answer to nearest whole dollar amount.
Normal Manufacturing Co. is purchasing a production facility at a cost of $22.5 million. The firm expects the project to generate annual cash flows of $7 million over the next five years. What is the internal rate of return on this project? (Round the finall answer to the nearest percent.) 20% 18% O 17% O 19%
A company's weighted average cost of capital is 9.4% per year. A project requires an investment of $15,000 today and it is expected to generate after-tax cash flows of $9,000 at the end of year 1, $5,000 at the end of year 2, and $4,000 at the end of year 3. What is the project's annual modified internal rate of return (MIRR)? A) 9.8% B) 10.5% C) 12.3% D) 1 11.4% E) 8.9%
The proposed expansion of CIV Electronics' plant facilities requires the immediate outlay of $102,000. Expected net returns are given in the following table. Calculate the internal rate of return (IRR) Year 1 Year 2 Year 3 $Nil $24,000 $30,000 Year 4 Year 5 Year 6 The internal rate of return is%. (Round to the nearest tenth as needed.) $53,000 $48,000 $17,000
Problem 2 please.
Calculate the capitalized cost of a project that has an initial cost of P3,000,000 and an additional cost of P100,000 at the end of every 10 years. The annual operating cost will be P100,000 at the end of every year for the first 4 years and P160,000 thereafter. In addition, there is expected to be recurring major rework cost of P300,000 every 13 years. Assume i=15%.
What is the annual equivalent worth of a project where (a) the initial investment is $50,000; (b) will have revenues of $8,000 per year; (c) annual cost of operation and maintenance of $1,200 and (d) a residual or salvage value of $2,000 after 15 years? Assume rate of return is 8%. A. $-41,200 B. $13,438 C. $6,800 D. $288 E. -$712 F. $3,600
Reclamation of a gravel pit is expected to begin 9 years from today with estimated end of year costs of 1.5 million dollars each year at the end of years 9, 10, 11 and 12. Part A What amount would the company need to invest or escrow today (time zero) to cover the future liabilities of 1.5 million in years 9, 10, 11, & 12? Other opportunities exist to invest available capital elsewhere and earn 10% per year compounded annually. Part B What amount would your company need to invest each year for the next 8 years (Years 1-8) to pay for the future liabilities of 1.5 million in years 9, 10, 11, & 12? Assume the same nominal 10% interest rate.
What is the expected operating cash flow for year 2 of a project given the following information. To undertake the project, $321,000 must be spent on new equipment. The equipment has an expected life of 7 years and will be depreciated straight- line over that same period to a book value of 0. New annual sales of $211,000 are expected (expected sales are the same each year). Cost of goods sold are projected to be 44% of sales, Fixed cash operating expenses are $46,000 per year. Tax rate is 26%, in the event EBIT is negative, the firm would have a tax credit based on the 26% tax rate. O a. 78385.51 Ob. 65321.26 Oe. 64862.69 Od. 68135.92 O e. 82304.78 Of. 54216.64

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