The formula for calculating the present value of the tax shield on capital cost allowance (CCA) applies when Blank______. Multiple choice question. the CCA asset class will remain open when the project is completed the cash flows are equal for every project the CCA asset class will close when the project is completed the discount rate is same for every project

The formula for calculating the present value of the tax shield on capital cost allowance (CCA) applies when Blank______. Multiple choice question. the CCA asset class will remain open when the project is completed the cash flows are equal for every project the CCA asset class will close when the project is completed the discount rate is same for every project

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 7MC: Calculate the project cash flows for each year. Based on these cash flows and the average project...

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In estimating "after-tax incremental operating cash flows" for a project, you should include all of the following except __________. a. changes in working capital resulting from the project, net of spontaneous changes in current liabilities b. changes in costs due to a general appreciation in those costs c. the amount (net of taxes) that we could realize from selling a currently unused building of ours that we intend to use for our project d. costs that have previously been incurred that are unrecoverable
Good day can I get the correct answers please
What is the formula for calculating present value of a project? If you are given annual profit in perpetuity, initial cost, tax rate, unlevered cost of equity, and how much of the project cost is finance through debt?
A project's IRR: A) All of these answers are correct. B is the average rate of return necessary to pay back the project's capital providers. C is equal to the discounted cash flows divided by the number of cash flows if the cash flows are a perpetuity. D will change with the cost of capital.
Payback, Accounting Rate of Return, Present Value, Net PresentValue, Internal Rate of ReturnAll scenarios are independent of all other scenarios. Assume that all cash flows are after-tax cashflows.a. Kambry Day is considering investing in one of the following two projects. Either projectwill require an investment of $20,000. The expected cash flows for the two projects follow.Assume that each project is depreciable b. Wilma Golding is retiring and has the option to take her retirement as a lump sum of$450,000 or to receive $30,000 per year for 20 years. Wilma’s required rate of return is6%.c. David Booth is interested in investing in some tools and equipment so that he can doindependent drywalling. The cost of the tools and equipment is $30,000. He estimatesthat the return from owning his own equipment will be $9,000 per year. The tools andequipment will last 6 years.d. Patsy Folson is evaluating what appears to be an attractive opportunity. She is currentlythe owner of a small…
Use the following after-tax cash flows for project A and B to answer the next question: (Numbers in parentheses are negative cash flows) These two projects are independent. Year Cash Flow of A Cash Flow of B 0 ($2900) ($500) 1 $980 $100 2 $990 $100 3 $960 $800 4 $920 $100 5 ($100) ($100) What is the approximate NPV of project A if the required rate of return is 9.5%? $128 $136 $28 $196 $163
Which of the following statements is true regarding the payback period? Multiple Choice It measures the length of time that it takes for a project to recover its initial cost from the discounted net cash inflows that it genera It measures the length of time that it takes for a project to recover its initial cost from the net cash inflows that it generates. It measures the length of time that it takes for a project to recover its initial cost from the incremental net operating income that It measures the length of time that it takes for a project to recover its initial cost from the discounted incremental net operating it generates.
Consider the cash flows for projects Alpha and Beta as follows: Project Alpha Beta Required: (a) (b) Year 0 cash flow -$250 - $150 Year 1 cash flow 0 Year 2 cash flow 400 200 0 Determine the discount rate that will make the NPV of the two projects equal. (Ignore negative discount rates.) Determine the range of discount rates in which project Alpha is preferred to project Beta.
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 −$29,000 −$29000 1 14,400 4,300 2 12,300 9,800 3 9,200 15,200 4 5,100 16,800 a) What is the Internal Rate of Return (IRR) for each of these projects? b) Using the IRR decision rule, which project should the company accept? c) If the required return is 11 percent, what is the Net Present Value (NV) for each of these projects? d) Using the NPV decision rule, which project should the company accept? e) Why do you think the NPV and IRR rules do not agree on same project approval/rejection direction?
Consider the following two mutually exclusive projects: Second part of the Question Year Cash Flow(X) Cash Flow(Y) 0 –$ 19,900 –$ 19,900 1 8,825 10,050 2 9,050 7,775 3 8,775 8,675 d) At which range of discount rates would you choose Project X over Project Y? e) At which range of discount rates would you choose Project Y over Project X?
The incremental cash tax flow for a capital budgeting project is calculated using which of the following formulas? O Annual amortization x marginal income tax rate Annual amortization x (1-marginal income tax rate) (Operating cash flow + annual amortization) x marginal income tax rate O Operating cash flow x marginal income tax rate
e. Estimate the required net operating working capital (NOWC) for each year and the cash flow due to changes in NOWC. f. Calculate the after-tax salvage cash flow. g. Calculate the project cash flows for each year. Based on these cash flows and the average project cost of capital, what are the project’s NPV, IRR, MIRR, PI, payback, and discounted payback? Do these indicators suggest that the project should be undertaken?