The following data are projected for a possible investment project: 1 2 3 4 Revenues $130,000 $150,000 $170,000 $190,000 Cost of Goods Sold $ 32,000 $ 38,000 $ 44,000 $ 50,000 Depreciation $ 70,000 $ 50,000 $ 30,000 $ 10,000 EBIT $ 28,000 $ 62,000 $ 96,000 $130,000 Refer to Exhibit 9-2. The project requires an initial investment of $340,000. Working capital is anticipated to be variable at 13% of revenues; the working capital investment must be made at the beginning of each period, and will be recaptured in full at the end of year 4. The tax rate is 38%. What is the net cash flow to the firm in year 1? Group of answer choices $62,400 $86,760 $5,400 $84,760 $300
The following data are projected for a possible investment project: 1 2 3 4 Revenues $130,000 $150,000 $170,000 $190,000 Cost of Goods Sold $ 32,000 $ 38,000 $ 44,000 $ 50,000 Depreciation $ 70,000 $ 50,000 $ 30,000 $ 10,000 EBIT $ 28,000 $ 62,000 $ 96,000 $130,000 Refer to Exhibit 9-2. The project requires an initial investment of $340,000. Working capital is anticipated to be variable at 13% of revenues; the working capital investment must be made at the beginning of each period, and will be recaptured in full at the end of year 4. The tax rate is 38%. What is the net cash flow to the firm in year 1? Group of answer choices $62,400 $86,760 $5,400 $84,760 $300
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Exhibit 9-2
The following data are projected for a possible investment project:
Refer to Exhibit 9-2. The project requires an initial investment of $340,000.Working capital is anticipated to be variable at 13% of revenues; the working capital investment must be made at the beginning of each period, and will be recaptured in full at the end of year 4. The tax rate is 38%.
What is the netcash flow to the firm in year 1?
The following data are projected for a possible investment project:
|
1
|
2
|
3
|
4
|
|
| Revenues |
$130,000
|
$150,000
|
$170,000
|
$190,000
|
| Cost of Goods Sold |
$ 32,000
|
$ 38,000
|
$ 44,000
|
$ 50,000
|
|
$ 70,000
|
$ 50,000
|
$ 30,000
|
$ 10,000
|
|
| EBIT |
$ 28,000
|
$ 62,000
|
$ 96,000
|
$130,000
|
Refer to Exhibit 9-2. The project requires an initial investment of $340,000.
What is the net
Group of answer choices
$62,400
$86,760
$5,400
$84,760
$300
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