You just bought an asset with a straight line depreciation of $6200 per year for the next 8 years. Assuming a corporate tax rate of 21%, what is the NPV of the actual cash savings associated with this cashflow? Use a discount rate of 6%.
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- An investment will provide after-tax revenue of $22,336 per year for 7 years. What is the present value of this revenue stream assuming a discount rate of 5.25%?After tax cash flows are 100,000 a year for 5 years. There is no terminal value. The payback period occurs exactly at the end of 3 years. Calculate the internal rate of return, net present value, and profitability index. Use an interest rate of 10%.You have just received a windfall from an investment you made in a friend’s business. You will receive end-of-year cash flows of $14,050, $3,250 and $16,480 for years 1 to 3, respectively. If the annual discount rate is 6%. a) What is the value of your windfall today? b) What is the value of your windfall at the end of year 3?
- You invest in a company which expects to pay you the following amounts in return each year. Year 1: $1,100, Year 2: $2,100, Year 3: $1,600, Year 4: $2,100, and Year 5 $1,500. If an annual interest rate is 5 percent, what is the present value of this uneven cash flow stream? $7,883 $7,807 $7,563 $7,237A firm will report annual Net Income of $50 and depreciation expense of $20 forever in the future. With a tax rate of 30%, how much is the present value of all future “tax shields”? Assume r = 4%.A lot purchased for $4,500 is held for five years and sold for $13,500. The average annual property tax is $45 and may be accounted for at an interest rate of 12%. The income tax rate on the long term capital gain is 15% of the gain. What is the rate of return on the investment if the allowance for inflation is treated at an average annual rate of 7%?
- Investment X offers to pay you $5,900 per year for 9 years, whereas Investment Y offers to pay you $8,700 per year for 5 years. If the discount rate is 4 percent, what is the present value of these cash flows? If the discount rate is 14 percent, what is the present value of these cash flows?XMT Corp. expects to receive AED 8 million per year for 8 years and AED 12 million per year for the next 10 years. What is the present value of this 18 year cash flow? Use a 5% discount rate.A company is considering purchasing new equipment. The purchase of the equipment is expected to generate after tax savings of $12,600 each year for 8 years. The company can borrow money at 6%. Assume annual compounding. Determine the present value of the future cash inflows.Hint: the $12,600 are your annuity payments
- A tax refund expected 1 year from now has a present worth of $3000 if i = 6%. What is its present worth if i = 4%?You will be receiving cash flows of: $2,000 today, $2,000 at the end of year 1, $3,000 at the end of year 3, and $6,000 at the end of year 5. What is the net present value of these cash flows at an interest rate of 4%?Suppose that starting a year from now you will receive $720 a year at the end of every year. If the discount rate is 6% what is this stream of cash flows worth today?