What is the operating cash flow for year 4 of the Eugene project that OreDuck should use in its NPV analysis of the project? The tax rate is 19.00%. During year4, the Eugene project is expected to have relevant revenue of $77,000, relevant variable costs of $26,000, and relevant depreciation of $15,000. In addition,OreDuck would have one source of fixed costs associated with the Eugene project. Yesterday, OreDuck signed a deal with State Beaver Advertising to developa marketing campaign. The terms of the deal require OreDuck to pay State Beaver Advertising either $17000.00 in 4 years if the Eugene project is pursued or$21000.00 in 4 years if the Eugene project is not pursued. Finally, the equipment purchased for the project would be sold in 4 years for an expected after-taxcash flow of $8,000.$47,400.00 (plus or minus $10)$30,390.00 (plus or minus $10)$69,170.00 (plus or minus $10)$55,400.00 (plus or minus $10)None of the above is within $10 of the correct answer

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What is the operating cash flow for year 4 of the Eugene project that OreDuck should use in its NPV analysis of the project? The tax rate is 19.0 4, the Eugene project is expected to have relevant revenue of $77,000, relevant variable costs of $26,000, and relevant depreciation of $15,000. In additi OreDuck would have one source of fixed costs associated with the Eugene project. Yesterday, OreDuck signed a deal with State Beaver Advertising to de a marketing campaign. The terms of the deal require OreDuck to pay State Beaver Advertising either $17000.00 in 4 years if the Eugene project is pursu $21000.00 in 4 years if the Eugene project is not pursued. Finally, the equipment purchased for the project would be sold in 4 years for an expected afte cash flow of $8,000. $47,400.00 (plus or minus $10) $30,390.00 (plus or minus $10) $69,170.00 (plus or minus $10) $55,400.00 (plus or minus $10) None of the above is within $10 of the correct answer

What is the operating cash flow for year 4 of the Eugene project that OreDuck should use in its NPV analysis of the project? The tax rate is 19.0 4, the Eugene project is expected to have relevant revenue of $77,000, relevant variable costs of $26,000, and relevant depreciation of $15,000. In additi OreDuck would have one source of fixed costs associated with the Eugene project. Yesterday, OreDuck signed a deal with State Beaver Advertising to de a marketing campaign. The terms of the deal require OreDuck to pay State Beaver Advertising either $17000.00 in 4 years if the Eugene project is pursu $21000.00 in 4 years if the Eugene project is not pursued. Finally, the equipment purchased for the project would be sold in 4 years for an expected afte cash flow of $8,000. $47,400.00 (plus or minus $10) $30,390.00 (plus or minus $10) $69,170.00 (plus or minus $10) $55,400.00 (plus or minus $10) None of the above is within $10 of the correct answer

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

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World Trans. is considering two mutually exclusive projects. Both require an initial investment of $9,200 at t = 0. Project X has an expected life of 2 years with after-tax cash inflows of $7,000 and $7,800 at the end of Years 1 and 2, respectively. In addition, Project X can be repeated at the end of Year 2 with no changes in its cash flows. Project Y has an expected life of 4 years with after-tax cash inflows of $5,000 at the end of each of the next 4 years. Each project has a WACC of 8%. Using the replacement chain approach, what is the NPV of the most profitable project? Do not round the intermediate calculations and round the final answer to the nearest whole number. Group of answer choices $5,971 $5,528 $6,855 $7,371 $7,592
Mulroney Corp. is considering two mutually exclusive projects. Both require an initial investment of $11,300 at t = 0. Project X has an expected life of 2 years with after-tax cash inflows of $6,600 and $7,600 at the end of Years 1 and 2, respectively. In addition, Project X can be repeated at the end of Year 2 with no changes in its cash flows. Project Y has an expected life of 4 years with after-tax cash inflows of $4,200 at the end of each of the next 4 years. Each project has a WACC of 8%. Using the replacement chain approach, what is the NPV of the most profitable project? Do not round the intermediate calculations and round the final answer to the nearest whole number. a. $3,448 b. $3,302 c. $2,611 d. $2,953 e. $2,464
RiverRocks, Inc., is considering a project with the following projected free cash flows: Year 0 Cash Flow - $50.8 (in millions) O A. Cash Flows (millions) - $50.8 The timeline for the project's cash flows is: (Select the best choice below.) Year B. Cash Flows (millions) The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. RiverRocks' WACC is 12.8%. Should it take on this project? Why or why not? Year O C. Cash Flows (millions) Year D. Cash Flows (millions) Year 0 - $50.8 0 $50.8 0 $50.8 0 - $10.8 + 1 $10.8 1 - $10.8 1 1 $10.8 $10.8 1 - $20.7 2 $20.7 2 - $20.7 2 2 $20.7 $20.7 2 - $19.5 3 $19.5 + 3 - $19.5 3 $19.5 3 $19.5 3 - $15.4 4 $15.4 4 - $15.4 4 $15.4 4 $15.4 4
The management of SoComfy Hotel wishes to capitalize on an investment project that will cost the management to pay $85,000 as an initial cost. This project will take three years to finish with the net cash flows stream of $18,000 for the first year, $21,000 for the second year, and $22,500 for the third year. Should the management accept the project by analyzing the net present value (NPV) of the cash flow stream if they have 12.00% minimum required rate of return on the project?
Olinick Corporation is considering a project that would require an investment of $354,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows (ignore income taxes.): Sales Variable expenses Contribution margin Fixed expenses: Salaries Rents Depreciation Total fixed expenses Net operating income Multiple Choice The scrap value of the project's assets at the end of the project would be $30,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to: (Round your answer to 1 decimal place.) 4.8 years $ 210,000 22,000 188,000 7.5 years 40,000 53,000 48,000 141,000 $ 47,000
ABC, Inc. is considering a project that requires $21,000 in net working capital and $121,000 in fixed assets, which belong in a 30% CCA class. The fixed assets have a salvage value of 28,500 at the end of the 3 year project. The after-tax operating income of the project is $61,300 per year. The tax rate is 35% and the required rate of return is 16%. What is the NPV of this project? Multiple Choice $67,386 $48,933 $34,226 $21,887 $54,289
Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $470,000 and has a present value of all its cash flows of $2,350,000. Project 2 requires an initial investment of $5,000,000 and has a present value of all its cash flows of $6,000,000. (a) Compute the profitability index for each project. (b) Based on the profitability index, which project should the company select? Complete this question by entering your answers in the tabs below. Required A Required B Compute the profitability index for each project. Profitability Index Numerator: Denominator: Profitability Index = Profitability index Project 1 Project 2
DDR Enterprises is analyzing an expansion project. The project's installed cost is $80,000. It is eligible for 100% bonus depreciation. The project has a $12,000 salvage value at the end of its five year expected life. The project will requie an additional $8,000 investment in net working capital. The tax rate is 25%. What is the project's initial investment? If you could show the steps in calcualtion too that would be great!
Pharoah Inc. is contemplating a capital project with a cost of $149000. The project will generate net cash flows of $44000 for year 1, $60000 for year 2 and $59000 for year 3. The asset has a salvage value of $10000 and straight-line depreciation will be used. The company's required rate of return is 10%. Year 1 2 3 0 0 0 0 Present Value of 1 at 10% 0.909 0.826 0.751 PV of an Annuity of 1 at 10% 0.909 1.736 2.487 acceptable because it has a positive NPV. unacceptable because it has a zero NPV. unacceptable because it earns a rate less than 10%. acceptable because it has a return of greater than 10%. SUPPO
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.9 million. The fixed asset will be depreciated straight-line to zero over its three year tax life, after which time it will be worthless. The project is estimated to generate $2,190,000 in annual sales, with costs of $815,000. The tax rate is 35%. What is the NPV of the project if the required rate of return is 12% O $47,523 O $59,255 O $68.991 O $52.648
Mulroney Corp. is considering two mutually exclusive projects. Both require an initial investment of $11,500 at t = 0. Project X has an expected life of 2 years with after-tax cash inflows of $6,900 and $7,700 at the end of Years 1 and 2, respectively. In addition, Project X can be repeated at the end of Year 2 with no changes in its cash flows. Project Y has an expected life of 4 years with after-tax cash inflows of $4,400 at the end of each of the next 4 years. Each project has a WACC of 8%. Using the replacement chain approach, what is the NPV of the most profitable project? Do not round the intermediate calculations and round the final answer to the nearest whole number. a. $3,399 b. $3,925 c. $3,073 d. $2,768 e. $3,620
Lakelord Company is considering two mutually exclusive projects, A and B. Project A costs $89977 and is expected to generate $64801 in year one and $66409 in year two. Project B costs $110404 and is expected to generate $58366 in year one, $62248 in year two, $68386 in year three, and $49405 in year four. The firm's required rate of return for these projects is 0.071. The net present value for Project A is Instruction: Type ONLY your numerical answer in the unit of dollars, NO $ sign, NO comma, and round to the nearest whole number. E.g., if your answer is $7,001.56, should type ONLY the number 7002, NEITHER 7,001.6, $7001.6, $7,001.6, NOR 7001.56. Otherwise, Blackboard will treat it as a wrong answer.

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