Question listQuestion 1Question 2Question 3Question 4O Question 5O Question 6Question 7Question 8(Calculating changes in net operating working capital) Duncan Motors is introducing a new product and has an expected change in net operating income of $290,000. DuncanMotors has a 36 percent marginal tax rate. This project will also produce $51,000 of depreciation per year. In addition, this project will cause the following changes in year 1:Without the Project$34,00027.00053,000With the Project$20,00036.00091,000Accounts receivableInventoryAccounts payable(Click on the loon in order to copy ds contents into a spreadsheer)What is the project's free cash flow in year 17The free cash flow of the project in year 1 is $. (Round to the nearest dolar)Help me solve this View an example Get more help.COLDClear allCheck answer

Net operating Income= Operating Income * (1-Tax rate)While Calculating Free Cash flow,Decrease in…

Answered: (Calculating changes in net operating…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 6P

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Racin’ Scooters is introducing a new product and has an expected change in EBIT of $475,000. Racin’ Scooters has a 21 percent marginal tax rate. Bonus depreciation will be $250,000 in year 1. In addition, the project will cause the following changes in year 1: WITHOUT THE PROJECT WITH THE PROJECTAccounts receivable $45,000 $63,000Inventory 65,000 80,000Accounts payable 70,000 94,000
Calculating changes in net operating working capital) Duncan Motors is introducing a new product and has an expected change in net operating income of $300,000. Duncan Motors has a 34 percent marginal tax rate. This project will also produce $50,000 of depreciation per year. In addition, this project will cause the following changes in year 1: Without the Project With the ProjectAccounts receivable $33,000 $23,000Inventory $25,000 $40,000Accounts payable $50,000 $86,000 The free cash flow of the project in year 1 is $ (Round to the nearest dollar.)
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Use excel The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $238,000 and cash expenses by $184,000. The initial investment will require $96,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 6-year life of the project. The company has a marginal tax rate of 32 percent. What is the annual value of the depreciation tax shield?
K- (Calculating changes in net operating working capital) Duncan Motors is introducing a new product and has an expected change in net operating income of $315,000. Duncan Motors has a 32 percent marginal tax rate. This project will also produce $54,000 of depreciation per year. In addition, this project will cause the following changes in year 1 Without the Project Accounts receivable $31.000 Inventory 27,000 Accounts payable 55.000 (Click on the soon in order to copy its contents into a spreadsheet) What is the project's free cash flow in year 17 The free cash flow of the project in year 1 is $ With the Project $20,000 44,000 61,000 (Round to the nearest dollar)
1. Textron is considering a NEW project. The financial projections are as follows: Year 0 Year 1 24,000 7,000 Year 2 24,000 Year 3 Sales 24,000 Total Costs 7,000 7,000 Depreciation Capital Investment (or Cost of Equipment) Working Capital (Requirements/Levels) 10,000 10,000 10,000 40,000 2000 2500 1000 The Equipment will be sold at the end of Year 3 for 11,000. The relevant tax rate is 35%. Compute the cash flows for the project. Please select file(s) Select file(s)
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Esc You consider purchasing a new piece of equipment (7yr MACRS property) for your manufacturing process for $120,000. The equipment has a 6-year useful life and no salvage value. The equipment is expected to generate an additional $40,000 of net income before taxes and depreciation each year by using this upgraded system. The combined federal and state income tax rate= 35%. Annual inflation = 4%. a. Fill in the following table assuming MACRS depreciation rates Year 46°F Rain showers 0 1 F1 2 O 2 3 4 5 Pretax income 6 MACRS Taxable Depreciation income F2 - F3 + F4 Ⓡ b. If your MARR = 12%, should you purchase this system based on your real after-tax income? Why or why not? F5 8 C B Tax owed F6 Q Search G After tax income F7 Ca 7 F8 O Inflation adjustment factor O F9 ala LG F10 Real after tax income 0 A I THE F11 - 0 1 asod F12 + Prt Sc ScrLk Post-it sod Ins Post-it Del Backspace Post-it PgUp Home asod> Post-it Mumi 1-10 PgOn End Pause Break 11-15 11-15 C
What is the NPV assuming a 12% rate of return. (ignore Tax) Bramble Inc. is considering modernizing its production facility by investing in new equipment and selling the old equipment. The following information has been collected on this investment: Depreciation is $10, 230 per year for the old equipment. The straight-line depreciation method would be used for the new equipment over an eight-year period with salvage value of $4,600. Calculate NPV assuming a 12% rate of return Bramble Inc. is considering modernizing its production facility by investing in new equipment and selling the old equipment. The following information has been collected on this investment: Cost Old Equipment Accumulated depreciation Remaining life Current salvage value Salvage value in 8 years Annual cash operating costs $81,840 Cost $41,000 8 years $11,200 $0 $35,700 New Equipment Estimated useful life Salvage value in 8 years Annual cash operating costs $38,000 8 years $4,600 $30,700 Depreciation is $10,230 per…
Macrohard Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the allowed depreciation rates for such property are 35 %, 43%, 17%, and 5% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year expected life. Equipment cost (depreciable basis) P78,000 Sales revenues, each year 50,000 Operating costs (excl. depreciation) 25,000 Tax rate 25.0% The following are the questions/requirements for this data set. Fill-up the answers in the next 3 questions: (Round final answers to nearest peso) Year 1 Operating Cash Flow • Year 3 Operating Cash Flow Year 5 Operating Cash Flow
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