The Wildhorse Co. is going to take on a project that is expected to increase its EBIT by $90,000, its fixed cost cash expenditures by $123,000, and its depreciation and amortization by $74,000 next year. If the project yields an additional 10 percent in revenue, what percentage increase in the project's EBIT will result from the additional revenue? (Round answer to 1 decimal place, e.g.

The Wildhorse Co. is going to take on a project that is expected to increase its EBIT by $90,000, its fixed cost cash expenditures by $123,000, and its depreciation and amortization by $74,000 next year. If the project yields an additional 10 percent in revenue, what percentage increase in the project's EBIT will result from the additional revenue? (Round answer to 1 decimal place, e.g.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Kelli is considering a project that would last for 3 years and have a cost of capital of 10.98 percent. The relevant level of net working capital for the project is expected to be $9,620.00 immediately (at year 0); $30,700.00 in 1 year; $27,500.00 in 2 years; and $8,520.00 in 3 years. Relevant expected operating cash flows and cash flows from capital spending in years 0, 1, 2, and 3 are presented in the following table. What is the net present value of this project? Operating cash flows Year 0 $0.00 Year 1 Year 2 Year 3 $52,500.00 $52,500.00 $52,500.00 Cash flows from capital spending -$97,700.00 $0.00 $0.00 $7,800.00 O $99,678.69 (plus or minus $10) $84,352.32 (plus or minus $10) O $114,320.23 (plus or minus $10) $24,215.27 (plus or minus $10) None of the above is within $10 of the correct answer
am.401.
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Oriole Corporation is considering adding a new product line. The cost of the factory and equipment to produce this product is $1,700,000. Company management expects net cash flows from the sale of this product to be $630,000 in each of the next eight years. If Oriole uses a discount rate of 11 percent for projects like this, what is the net present value of this project? (Round intermediate calculations to 5 decimal places, e.g. 0.42354. Round answer to O decimal places, e.g. 52.25. Enter negative amounts using negative sign e.g. -45.25.) NPV $ 36695.55 What is the internal rate of return? (Round answer to 2 decimal places, e.g. 52.50.) Internal rate of return %
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