Skywards Inc., an airline caterer, is purchasing refrigerated trucks at a total cost of $3.25 million. After-tax net income from this investment is expected to be $750,000 for the next five years. Annual depreciation expense was $650,000. The company’s cost of capital is 15 percent.  Compute the discounted payback for this project?  Compute the NPV for this project  Compute the IRR for this project

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A: The operating cash flow is calculated as revenues less expense net of taxes.

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A: Annual net cash flows is calculated as the difference between the annual cash flows and cash…

Q: A new machine costing $100,000 is expected to save the MchKaig Brick Company $15,000 per year for 12…

A: Net cash flow from the project means the amount of profit after taxes plus depreciation as…

Q: Required: 1. What is the net present value (NPV) of the proposed investment under each of the…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

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A: Excel Spreadsheet:

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A: 1.Payback period is the amount of time require for firm to recover its intial investment. Payback…

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A: Here, Tax Rate (Tc) is 34% CCA Rate (d) is 25% Initial Investment = $22,000,000 Survey Cost=…

Q: Colsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed…

A: Sales=$25 millionOperating cost=$22.5 millionInterest expense=$3millionTax rate=25%

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A: The payback period is the amount of time it takes to recover the initial cash outflow. The NPV is…

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A: net present value is difference between present value of cash outflow and present value of cash…

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A: Note:Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: A large high-volume food manufacturing company is investing $146,680 to buy equipment for a new…

A: Net Present Value It is the method under which cash inflows that are received during the lifetime of…

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A: Annual cash flow:

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A: Present worth of investment = Present value of increase in revenue - Initial costs where. Present…

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A: Given:

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A: Discount rate 12% YEAR CASH FLOW  0  $ (7,125,000.00) 1  $    1,875,000.00 2  $…

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A: Annual Worth  It is defined as an equivalent uniform AW of all the estimated receipts as well as the…

Q: Al’ain Corporation is studying a project that would have a ten-year life and would require a…

A: Payback period =Initial investmentAnnual cash flows   Initial investment =$420000 Annual cash flows…

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A: Here asked for multi sub part question we will solve first three sub part question for you.  If you…

Q: Primus Corp. management is planning to convert an existing warehouse into a new plant that will…

A: The formula to compute payback period as follows:

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A: Annual net cash inflow = Sales - variable expenses - fixed cost   Depreciation is a noncash expense…

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A: Given information: Cost of the equipment is $1,750,000 Expected cash flows over 4 years is…

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A: The weighted average cost of capital is the cost of funds which are used in the project…

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A: Internal rate of return is defined as the metric, which is generally used in the financial analysis…

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A: Given, Cost = $1.38 million  Annual Sales =  $541,000

Q: Cardinal Company is considering a project that would require a $2,815,000 investment in equipment…

A:

Q: Colsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed…

A: Standard disclaimer  “Since you have asked multiple questions, we will solve the first question for…

Q: The Lumber Yard is considering adding a new product line that is expected to increase annual sales…

A: Depreciation Tax shield = Tax rate x Depreciation Expense Depreciation Expense = Cost - Salvage…

Q: The proposed capital project calls for the Manufacturing Department to fully automate a production…

A: Net present value refers to the calculation of the total value of an investment as it indicates…

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A: The acronym IRR stands for internal rate of return. It shows the actual return wherein the present…

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A: Given revenues =135,000 per year Direct production costs =$45,000 fixed costs =$17,500 a year…

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A: NPV means PV of net benefits arises from the project in coming years. It is equal to the difference…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.