Yellow Ocean Paint is evaluating Project A. In year 3, Yellow Ocean Paint would have revenue of $688,000 and costs of $314,000 if itpursues Project A, and the firm would have revenue of $579,000 and costs of $219,000 if it does not pursue Project A. Depreciationtaken by the firm in year 3 would be $216,000 if the firm pursues the project and $162,000 if the firm does not pursue the project. Thetax rate is 20 percent. What is the operating cash flow for year 3 that Yellow Ocean Paint should use in its NPV analysis of Project A?Input instructions: Round your answer to the nearest dollar.22,000 dollars

To calculate the operating cash flow (OCF) for Year 3 that Yellow Ocean Paint should use in its NPV…

Answered: Yellow Ocean Paint is evaluating…

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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XYZ operates indoor tracks. The firm is evaluating the Santa Fe project, which would involve opening a new indoor track in Santa Fe. During year 1, XYZ would have total revenue of $168,000 and total $78,000 if it pursues the Santa Fe project, and the firm would have total revenue of $156,000 and total costs of $71,400 if it does not pursue the Santa Fe project. Depreciation firm would $76,400 if the firm pursues the project and $39,100 if the firm does not pursue the project. The tax rate is 44.70%. What is the relevant operating cash flow (OCF) for year 1 of the Santa Fe project that should use in its NPV analysis of the Santa Fe project? taken by the O $29,640.70 (plus or minus $1) O $43,900.00 (plus or minus $1) O $24,240.70 (plus or minus $1) O $19,659.30 (plus or minus $1) O None of the above is within $1 of the correct answer costs of be XYZ
Tempura, Inc., is considering two projects. Project A requires an investment of $58,000. Estimated annual receipts for 20 years are $20,000; estimated annual costs are $12,500. An alternative project, B, requires an investment of $77,000, has annual receipts for 20 years of $26,000, and has annual costs of $18,000. Assume both projects have a zero salvage value and that MARR is 16.0 %/year. What is the present worth of each project? Project A: $ Project B: $
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You must evaluate the purchase of a proposed Spectrometer for R&D department. The purchase. Price of the spectrometer including modifications is $200,000, and the equipment will be depreciated at the time of purchase. The equipment would be sold after 3 years for $51,000. The equipment would require a $15,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save firm $49,000 per year in before-tax laber casts. The firm's marginal fecteral-plus-state tarrate is 25% a) What is the initial investment outlay for the Spectrumeter after bonus depreciation is considered, that is the Year 0 project cash flow? the Enter your answer as a a positive value. Rand answer to the nearest dollar. $ b.) What are the project's annual cash flows in Years Round 1, 2, and 3? Do not round intermediate calculations. your answers to the nearest dollar. Year 1: 9 Year 2: $ Year 3: $ 10 4 your
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