A firm has fixed assets at the end of 2022 of $40,000. At the beginning of 2022, it's fixed assets were $35,000. During the year, the firm recorded $2000 in depreciation. How much was recorded for the firm's CAPEX?  Hint #1: CAPEX = end FA - beg FA + dep Hint #2: Be careful with beginning and ending

Your employer, Rubio LLC,  is considering an investment in an office building that has the following cash flows: Purchase in Year 0……………   $ -2,750,000 Year 1……………….      220,000 Year 2………………..     226,000 Year 3………………..     250,000 Year 4…………………    255,000 Year 5 …………………   230,000, and a sale @ $3,290,000 takes place EOY 5 The company’s weighted average cost of capital that they use as their discount rate for such calculations is 12% What would be the total cash flows in Year 5, taking into consideration the cash flows, annual debt service, sale price and the balance on the loan at the EOY 5? $1,662,985 $1,937,607 $1,802,986 $1,343,455 What is the leveraged IRR of the project ? 64% 58% 48% 55% In the above problem, you might expect The Yield to be higher than the discount rate because you sold the property at a profit. The NPV to be positive because the IRR is higher than the discount rate The NPV to be negative because the IRR is lower than the discount rate All of the…

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You have been assigned to check the valuation of InfoSystems, a software firm, done by a colleague of you. Infosystems has an expected life 5 years, constant cash flows over this period, and zero salvage value. The income statement of the Infosystems is given as follows: Revenues - Operating Expenses EBIT - Interest expenses Taxable Income - Taxes Net Income Years 1-5 €1,000 €550 €450 €85 €365 €146 €219 Infosystems has no capital expenditures, depreciation or working capital needs, i.e. the earnings are the cash flows to the firm. The cost of capital is 10% i. Estimate the value of Infosystems. ii. Assume that the value derived in (i) is the one also estimated by your colleague. How would you change your calculations if you are given that the cash flows are real cash flows and the cost of capital is the nominal cost of capital. The expected inflation rate is 2% annually. Comment on your answer.