Tech Corp evaluates a project with $40,000 increased sales. Project costs $200,000, depreciated straight-line over 8 years. Tax rate 30%. What's the OCF? A. $12,000 B. $34,000 C. $28,000 D. $40,000
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- Need helpYou work for Whittenerg Inc., which is considering a new project whose data are shown below. What is the project's Year 1 cash flow? Sales revenues, each year $64,500 Depreciation $8,000 Other operating costs $25,000 Interest expense $8,000 Tax rate 35.0% a. $20,017 b. $20,715 c. $22,577 d. $19,318 e. $23,2751- BROWN Co. is determining whether they should purchase a new machine. The machine cost is $380,000, installation costs are $20,000. MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for this 3 year project is $160,000, $230,000, $100,000 respectively. The machine could be sold at the end of the 3 years for $60,000. What is the initial investment for this project? 2- BROWN Co. is determining whether they should purchase a new machine. The machine cost is $380,000, installation costs are $20,000. MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for this 3 year project is $160,000, $230,000, $100,000 respectively. The machine could be sold at the end of the 3 years for $60,000. What is the OCF (operating cash flow) for year 1 for this project?
- 3. A project requires an initial investment of $1,000,000 and generates annual income of $300,000 for the next 4 years with a salvage value of $200,000. At MARR of 10% determine if this is a good investment. Use MACRS with the depreciation life of 3 years. Effective tax rate is 40%. Use PW. Not a good investment O Good investment1.A project of GHS2,000,000 yielded annually a profit of GHS400,000 after depreciation at 10% and subject to income tax at 40%. Calculate payback period of this project 2.A project is expected to cost $10,000,000. The expected annual income before depreciation and tax is $2,000,000. Provision for depreciation at 10%. Income tax at 25%. Calculate the payback period of this project.General Accounting
- Show step by stepwhen answering the question please type out all of your workA firm is looking at an expansion project will entail an equipment purchase of $110,000 along with another $10,000 in installation costs. MACRS 3 year. Increased net sales (net of expenses except for depreciation or EBITDA) are 40,000 year 1, 70,000 year 2 and 30,000 year 3. The equipment can be sold at the end of the 3 years for $20,000. Tax 30%. WACC 8% 1.What is the initial investment (CFO)? 2.What are the year 1-3 OCFs (operating cash flows)? 3.What is the terminal value? 4.What is the NPV (net present value)? 5.What is the IRR (internal rate of return)? 6.What is the payback? What is the discounted payback?
- Ernie's Electrical is evaluating a project that will increase sales by $48,000 and costs by $16,000. The project will initially cost $89,000 for fixed assets that will be depreciated straight-line to a zero book value over the 6-year life of the project. The applicable tax rate is 34 percent. What is the project’s annual operating cash flow? Group of answer choices $23,300.13 $21,450.87 $26,163.33 $22,406.67 $18,180.09Maven Design Inc. is considering two investment projects, X and Y. Company’s cost of capital is 7.50% and that the investments will produce the following after-tax cash flows (in thousands of dollars): Year Project X Project Y 0 −$1,100 −$2,700 1 $550 $650 2 $600 $750 3 $100 $800 4 $100 $1,400 A. Calculate the NPV, IRR, MIRR, regular payback period, discounted payback period, and profitability index for each project. For each selection criterion, indicate the correct accept/reject decision for each project and ranking (best acceptable project). Assume a 3-year payback acceptance criterion for the company. Project X Project Y Accept/Reject Ranking NPV ($) IRR (%) MIRR (%) Payback Period (Years) Discounted PB (Years) PI B. If the two projects are independent and the cost of capital is 7.5%, which…A 5-year project is expected to generate revenues of $100000, variable costs of $24000, and fixed costs of $16500. The annual depreciation is $12000 and the tax rate is 35 percent. What is the annual operating cash flow? a. $43,275. b. $40,875. c. $43,000. d. $44,500. e. $42,875.
