Spotted Potato is evaluating project A, which would require the purchase of a piece of equipment for $550,000. During year 1, project A is expected to have relevant revenue of $312,000.00, relevant costs of $105,000.00, and some depreciation. Spotted Potato would need to borrow $550,000 for the equipment and would need to make an interest payment of $40,000 to the bank in year 1. Relevant net income for project A in year 1 is expected to be $96000.00 and operating cash flows for project A in year 1 are expected to be $167000.00. Straight-line depreciation would be used. What is the tax rate expected to be in year 1? 29.41% (plus or minus 3 bps) 13.51% (plus or minus 3 bps) 70.59% (plus or minus 3 bps) 34.53% (plus or minus 3 bps) none of the answers are within 3 bps of the correct answer

XYZ is evaluating a project that would require the purchase of a piece of equipment for $440,000 today. During year 1, the project is expected to have relevant revenue of $786,000, relevant costs of $201,000, and relevant depreciation of $132,000. XYZ would need to borrow $440,000 today to pay for the equipment and would need to make an interest payment of $33,000 to the bank in 1 year. Relevant net income for the project in year 1 is expected to be $337,000. What is the tax rate expected to be in year 1?     A rate equal to or greater than 21.96% but less than 26.61%     A rate less than 21.96% or a rate greater than 46.34%     A rate equal to or greater than 31.02% but less than 38.39%     A rate equal to or greater than 38.39% but less than 46.34%     A rate equal to or greater than 26.61% but less than 31.02%

Spotted Potato is evaluating a project that would require the purchase of a piece of equipment for $496,000 today. During year 1, the project is expected to have relevant revenue of $405,000, relevant costs of $158,000, and relevant depreciation of $110000. Spotted Potato would need to borrow $496,000 today for the equipment and would need to make an interest payment of $28,000 to the bank in 1 year. Relevant operating cash flow for the project in year 1 is expected to be $192,000. What is the tax rate expected to be in year 1? 40.15% (plus or minus 3 bps) 14.94% (plus or minus 3 bps) 56.26% (plus or minus 3 bps) 19.71% (plus or minus 3 bps) none of the answers are within 3 bps of the correct answer

Before evaluating the economic merits of a proposed investment, the XYZCorporation insists that its engineers develop a cash-flow diagram of the proposal. An investment of $10,000 can be made that will produce uniform annual revenue of $5,310 for five years and then have a market (recovery) value of $2,000 at the end of year (EOY) five. Annual expenses will be $3,000 at the end of each year for operating and maintaining the project. Draw a cash-flow diagram for the five-year life of the project. Use the corporation’s viewpoint.

A proposed cost-saving device has an installed cost of $765,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $67,000, the tax rate is 21 percent, and the project discount rate is 9 percent. The device has an estimated Year 5 salvage value of $103,000. What level of pretax cost savings do we require for this project to be profitable?

The asking price (initial investment) for a project is $290,000. The end of year after tax cash flows from operations associated with this project will be $80,000 for year 1; $80,000 for year 2; -$110,000 for year 3; and $300,000 for end of year four. What is an IRR for this project? How many IRRs are possible

A proposed cost-saving device has an installed cost of $905,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $65,000, the tax rate is 22 percent, and the project discount rate is 9 percent. The device has an estimated Year 5 salvage value of $125,000. What level of pretax cost savings do we require for this project to be profitable? (MACRS schedule) Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Required cost savings

KUST is evaluating a new project for hangu campus. The financial manager has determined that the after-tax cash flows for the project will be $10,000; $12,000; $15,000; $10,000; and $7,000, respectively, for each of the Years 1 through 5. The initial cash outlay will be $40,000. The management of KUST has set a maximum PBP of 3.5 years and hurdle rate 13% for projects of this type. Should this project be accepted or rejected while using budgeting technique?

A proposed cost-saving device has an installed cost of $835,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $95,000, the tax rate is 25 percent, and the project discount rate is 11 percent. The device has an estimated Year 5 salvage value of $145,000. What level of pretax cost savings do we require for this project to be profitable? MACRS schedule (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Table 9.7 Modified ACRS depreciation allowances Property Class Year 1 NT 2 3 4567 5 6 8 3-Year 33.33% 44.45 14.81 7.41 5-Year 20.00% 32.00 19.20 11.52 11.52 5.76 7-Year 14.29% 24.49 17.49 12.49 8.93 8.92 8.93 4.46