The Ford Corpor to produce auto parts. The business is expected to last for 6 years. They expect start- up costs of $4,500,000. Expenses are expected to be $600,000 per year. Revenues will be $700,000 per year. The Ford Corporation estimates that they can sell the facility for $9.000,000 at the end of 6 years. Assume revenue occurs at the end of each year and expenses occur at the beginning of each year. What is the annual cash flow and how many times this cash flow repeated for? A) C01-$100.000, FO1-6 B) C01-$100,000, FO1-5 OC) Co1-$1.600,000, FO1-6 O DI C01-$2.200,000, FO1-6 OE) Co1-S700,000. FO1-6
The Ford Corpor to produce auto parts. The business is expected to last for 6 years. They expect start- up costs of $4,500,000. Expenses are expected to be $600,000 per year. Revenues will be $700,000 per year. The Ford Corporation estimates that they can sell the facility for $9.000,000 at the end of 6 years. Assume revenue occurs at the end of each year and expenses occur at the beginning of each year. What is the annual cash flow and how many times this cash flow repeated for? A) C01-$100.000, FO1-6 B) C01-$100,000, FO1-5 OC) Co1-$1.600,000, FO1-6 O DI C01-$2.200,000, FO1-6 OE) Co1-S700,000. FO1-6
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
Related questions
Question
100%
Transcribed Image Text:The Ford Corporation is looking at opening a small manufacturing facility in Richman
to produce auto parts. The business is expected to last for 6 years. They expect start-
up costs of $4,500,000. Expenses are expected to be $600,000 per year. Revenues
will be $700,000 per year. The Ford Corporation estimates that they can sell the
facility for $9.000,000 at the end of 6 years, Assume revenue occurs at the end of
each year and expenses occur at the beginning of each year. What is the annual cash
flow and how many times this cash flow repeated for?
A) Co1-$100,000 , F01=6
O B) C01-$100,000. FO1-5
C) Co1-$1.600,000 , FO1-6
O D) CO1-$2,200,000, F01-6
O E) C01-$700,000, FO1-6
Expert Solution
Step 1
The annual cash flow is the cash flow that is received at the end of the year after deducting all the cash outflow.
Step 2
The computation of the annual cash flow is as follows:
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education