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- Delta Products is considering a new 4-year expansion project that requires an initial fixed asset investment of $2.15 million. The fixed asset will be depreciated straight-line to zero over its 4-year life, after which time it will be worthless. The project is estimated to generate $2.23 million in profits per year. If the tax rate is 17%, what is the OCF for this project? (Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.) OCFTree's Ice Cubes is considering a new three-year expansion project. The initial fixed asset investment will be $1.80 million and the fixed assets will be depreciated straight-line to zero over its three-year tax life, after which time the assets will be worthless. The annual sales of the project is estimated to be $1,005,000, with costs of $485,000. What is the OCF for this project, if the tax rate is 21 percent? (Do not round intermediate calculations.) Multiple Choice $536,800 $812,246 $544,200 $616,150 $746150Harrison Company is considering taking on a project that requires an initial cost of $180,000. The project has a lifespan of two (2) years, after which after two years the project has no salvage value. The possible incremental after-tax cash flows and their probabilities can be seen in the following table. The required return by the company for this investment is 8%. Questions :a). The expected net present value of this projectb). If it is possible to abandon (abandonment) this project and the abandonment value at the end of the first year is $90,000 after tax. For this project, is abandonment of this project after one year is the right choice? Calculate the expected net present value, assuming that the company would abandon the project if it were useful. Compare with the calculations in the answer to part (a). What are the implications if you are a financial manager?
- Quad Enterprises is considering a new 4-year expansion project that requires an initial fixed asset investment of $5.994 million. The fixed asset will be depreciated straight - dine to zero over its 4-year tax life, after which time it will be worthless. The project is estimated to generate $5,328,000 in annual sales, with costs of $2,131,200. If the tax rate is 22 percent, what is the OCF for this project? Multiple Choice $3,196,800 $1,324,674 $2,964, 333 $2,823, 174 $2,682,015 Quad Enterprises is considering a new 4-year expansion project that requires an initial fixed asset investment of $5.994 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will be worthless. The project is estimated to generate $5,328,000 in annual sales, with costs of $2,131,200. If the tax rate is 22 percent, what is the OCF for this project? Multiple Choice O₁. $3,196,800 $1,324,674 $2,964,333 $2.823174 $2.682.015Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2,380,090. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will be worthless. The project is estimated to generate $1,966,851 in annual sales, with costs of $1,680,260. If the tax rate is 0.35 , what is the OCF for this project?b. Cendrawasih Inc. is considering replacing the equipment it uses to produce crayons. The equipment would cost RM1.37 million, have a 12-year life, and lower manufacturing costs by an estimated RM304,000 a year. The equipment will be depreciated using straight-line depreciation to a book value of zero. The required rate of return is 15 percent and the tax rate is 35 percent. Determine the net income from this proposed project.
- SummerTyme Inc is considering a new three year expansion project that requires an initial fixed asset investment of $3.9 million. The fixed asset will be depreciated straight-line to zero over its three-year life, after which time it will be worthless. The project is estimated to generate $2,650,000 in annual sales, with costs of $840,000. The tax rate is 35%. The discount rate is 12%. 3. What is the OCF each year for this project? Assuming the required return on this project is 12%, what is the project's NPV? What is the project's IRR? Should you accept or reject this project? Suppose the project requires an initial investment in net working capital of $300,000, and the fixed asset will have a market value of $210,000 at the end of the project. What is the project's year 0 net cash flow? Year 1? Year 2? Year 3? What is the new NPV? а. b. с. d. Discuss how sunk costs, opportunity costs, side effects, financing costs, and taxes should be treated in capital budgeting analysis and why.…Quad Enterprises is considering a new 2-year expansion project that requires an initial fixed asset investment of $5.346 million. The fixed asset will be depreciated straight-line to zero over its 2-year tax life, after which time it will be worthless. The project is estimated to generate $4,752,000 in annual sales, with costs of $1,900,800. If the tax rate is 24 percent, what is the OCF for this project? Show answer using excel functions.Fitzgerald Computers is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will have zero book value, and it will be depreciated by the straight-line method over 3 years. Revenues and other operating costs are expected to be constant over the project's 4-year life. What is the project's Year 4 cash flow? $65,000 Equipment cost (depreciable basis) Straight-line depreciation rate Sales revenues, each year Operating costs (excl. deprec.) Tax rate a. $27,500 b. $28,438 c. $22,750 d. $21,000 e. $30,333 33.33% $60,000 $25,000 35.0%
- Wary Corporation is considering the purchase of a machine that would cost $335,000 and would last for 5 years. At the end of 5 years, the machine would have a salvage value of $48,000. The machine would reduce labor and other costs by $101,000 per year. The company requires a minimum pretax return of 10% on all investment projects. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Required: Determine the net present value of the project. Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. Net present valueShao Airlines is considering the purchase of two alternative planes. Plane A has an expected life of 5 years, will cost $100 million, and will produce net cash flows of $28 million per year. Plane B has a life of 10 years, will cost $132 million, and will produce net cash flows of $27 million per year. Shao plans to serve the route for only 10 years. Inflation in operating costs, airplane costs, and fares are expected to be zero, and the company's cost of capital is 9%. By how much would the value of the company increase if it accepted the better project (plane)? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1.234 million should be entered as 1.234, not 1,234,000. Round your answer to three decimal places. $ What is the equivalent annual annuity for each plane? Do not round intermediate calculations. Enter your answers in millions. For example, an answer of $1.234 million should be entered as 1.234, not 1,234,000. Round your answers…Happiny Corporation is considering the purchase of new equipment costing P300,000. The projected annual after-tax net income from the equipment is P12,000, after deducting P100,000 for depreciation. The revenue is to be received at the end of each year. The machine has a useful life of 3 years and no salvage value. Butler requires a 12% return on its investments. What is the net present value of the machine? Group of answer choices (P36,000). P(31,000). P36,000. P31,000. P300,000.