Epiphany Industries is considering a new capital budgeting project that will last for three years. Epiphanyplans on using a cost of capital of 12% to evaluate this project. Based on extensive research, it has preparedthe following incremental cash flow projects:I need help to see how I could plug these numbers in my calculator. If you could show me how you found NPV in your calculator. YearSales (Revenues)- Cost of Goods Sold (50% of Sales)- Depreciation= EBIT- Taxes (35%)= unlevered net income+ Depreciation+(-) increase/(decrease) in workingcapital- capital expenditures0123150,000 150,000 150,00075,000 75,000 75,00025,000 25,000 25,00050,000 50,000 50,00017,50017,500 17,50032,500 32,500 32,50025,00025,000 25,0005,0005,000 -10,000-90,000The net present value (NPV) for Epiphany's Project is closest to

NPV Formula: NPV = -Initial Investment + CF₁/(1+r)¹ + CF₂/(1+r)² + CF₃/(1+r)³Where r = 12% = 0.121.…

Year Sales (Revenues) - Cost of Goods Sold (50% of Sales) - Depreciation = EBIT - Taxes (35%) = unlevered net income + Depreciation +(-) increase/(decrease) in working capital - capital expenditures 0 1 2 3 150,000 150,000 150,000 75,000 75,000 75,000 25,000 25,000 25,000 50,000 50,000 50,000 17,500 17,500 17,500 32,500 32,500 32,500 25,000 25,000 25,000 5,000 5,000 -10,000 -90,000 The net present value (NPV) for Epiphany's Project is closest to

Year Sales (Revenues) - Cost of Goods Sold (50% of Sales) - Depreciation = EBIT - Taxes (35%) = unlevered net income + Depreciation +(-) increase/(decrease) in working capital - capital expenditures 0 1 2 3 150,000 150,000 150,000 75,000 75,000 75,000 25,000 25,000 25,000 50,000 50,000 50,000 17,500 17,500 17,500 32,500 32,500 32,500 25,000 25,000 25,000 5,000 5,000 -10,000 -90,000 The net present value (NPV) for Epiphany's Project is closest to

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 8EP

See similar textbooks

Similar questions

Use the table for the question below. Revenues -Cost of Goods Sold -Depreciation =EBIT -Taxes (30%) =Profit after tax +Depreciation -Change in NOWC -Capital Expenditures =Free Cash Flow Year 0 a. by 22.5% O b. by 19.5% c. by 25.5% d. by 27.5% -300,000 Year 1 400 000 -180 000 -100 000 120 000 -36 000 84 000 100 000 -20 000 164 000 Year 2 400 000 -180 000 -100 000 120 000 -36 000 84 000 100 000 -20 000 164 000 Year 3 400 000 -180 000 -100 000 120 000 -36 000 8 000 100 000 -20 000 164 000 Visby Rides, a limousine hire company, is considering buying some new luxury cars. After extensive research, they come up with the above estimates of free cash flow from this project. By how much could the opportunity cost of capital rise before the net present value (NPV) of this project is zero, given that it is currently 10%?
Revenues - Cost of Goods Sold - Depreciation =EBIT - Taxes (20%) =Unlevered net income +Depreciation - Additions to Net Working Capital - Capital Expenditures =Free Cash Flow Year 0 OA. by 35% OB. by 41% OC. by 69% O D. by 55% Year 1 500,000 - 300,000 Year 2 500,000 - - 100,000 -100,000 165,000-165,000 235,000 -47,000 235,000 -47,000 Year 3 500,000 -165,000 -100,000 188,000 188,000 100,000 100,000 - 20,000 - 20,000 268,000 268,000 Visby Rides, a livery car company, is considering buying some new luxury cars. After extensive research, they come up with the above estimates of free cash flow from this project. Visby learns that a competitor is thinking of offering similar services, thus reducing Visby's sales. By how much could sales fall before the net present value (NPV) was zero, given that the cost of capital is 8%, and that cost of goods sold is 45% of revenues? 235,000 - 47,000 188,000 100,000 - 20,000 268,000
9
p3-10
Need help calculating: A. Economic value added and B. Return on Capital
Years Revenue Cash Expense Book Depreciation Book Income Pre-Tax Book Tax at 32% After Tax Book Income Financial Measures Profit Margin % Net Assets ROA % Cashflow Revenue Cash Expense Tax Depreciation Pretax Income Tax at 32% After Tax Income After Tax Cashflow Cumulative Cashflow Payback Period Present Worth 10 PW12 PW15 IRR PV Index(15) Facility Cost Income Tax Rate 0 C. -9.5 d. -12.4 $ 100,000.00 2.2 Years 91740.92679 0.395702526 1 0.684350818 $ 100,000.00 32% $30,000.00 $100,000.00 $120,000.00 $140,000.00 $150,000.00 $150,000.00 $50,000.00 $60,000.00 $70,000.00 $75,000.00 $75,000.00 2 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $0.20 $20,400.00 $27,200.00 $0.26 $9,600.00 $12,800.00 $16,000.00 $17,600.00 $17,600.00 $20,400.00 ($100,000.00) $40,400.00 $51,040.00 ($100,000.00) -$59,600.00 -$8,560.00 $40,000.00 $50,000.00 $55,000.00 $55,000.00 $0.23 3 $0.45 $36,727.27 $80,000.00 $60,000.00 $40,000.00 $20,000.00 $0.85 $1.87 4 $19,040.00 5 $34,000.00 $37,400.00 $0.24…
Consider the following income statement: Sales $ 383,208Costs 249,312Depreciation 56,700Taxes 25% Calculate the EBIT. Calculate the net income. Calculate the OCF. What is the depreciation tax shield? Pls fast
Calculate: Profits before and after taxes Change in cash EBITD Coverage ratio REVENUE 400,000 OPERATING COSTS 250,000 DEPRECIATION 25,000 INTEREST 20,000 PROFITS TAX 20%
Billingham Packaging is considering expanding its production capacity by purchasing a new machine, the XC-750. The cost of the XC-750 is $2.83 million. Unfortunately, installing this machine will take several months and will partially disrupt production. The firm has just completed a $50,000 feasibility study to analyze the decision to buy the XC-750, resulting in the following estimates: • Marketing: Once the XC-750 is operational next year, the extra capacity is expected to generate $10.20 million per year in additional sales, which will continue for the 10-year life of the machine. • Operations: The disruption caused by the installation will decrease sales by $4.96 million this year. As with Billingham's existing products, the cost of goods for the products produced by the XC-750 is expected to be 73% of their sale price. The increased production will also require increased inventory on hand of $1.13 million during the life of the project, including year 0. • Human Resources: The…
p3-7
Use the following information to answer the next question. Total Asset = $40 million Basic earning power (BEP) ratio is 20% Times-interest-earned (TIE) Principal payments = 4 million ratio is 6.55 $1.35 million; $0.37 million What is the company's EBIT? The company's interest expense? $3.33 million; $0.83 million $8.0 million; $0.62 million Depreciation = $1.0 million. $7.5 million; $0.75 million Lease payments = 0.6 million $8.0 million; $1.22 million
Prepare a common size income statement given the following information: Revenues = $100,000 COGS = $43,000 SG&A = $22,000 Depreciation = $10,000 Interest Owed = $5,000 Tax Rate = 40%