Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- Hubrey Home Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $3.7 million. The fixed asset falls into Class 10 for tax purposes (CCA rate of 30% per year), and at the end of the three years can be sold for a salvage value equal to its UCC. The project is estimated to generate $2,630,000 in annual sales, with costs of $832,000. If the tax rate is 35%, what is the OCF for each year of this project? (Enter the answers in dollars. Do not round your intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) OCF1 $ OCF2 $ OCF3 $arrow_forwardDDR Enterprises is analyzing an expansion project. The project's installed cost is $80,000. It is eligible for 100% bonus depreciation. The project has a $12,000 salvage value at the end of its five year expected life. The project will requie an additional $8,000 investment in net working capital. The tax rate is 25%. What is the project's initial investment? If you could show the steps in calcualtion too that would be great!arrow_forwardQuad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.9 million. The fixed asset will be depreciated straight-line to zero over its three year tax life, after which time it will be worthless. The project is estimated to generate $2,190,000 in annual sales, with costs of $815,000. The tax rate is 35%. What is the NPV of the project if the required rate of return is 12% O $47,523 O $59,255 O $68.991 O $52.648arrow_forward
- Esfandiri Enterprises is considering a new three year expansion project that requires an initial fixed asset investment of $2.18 million. The fixed asset will be depreciated straight-line to zero over its three year tax life, after which time it will be worthless. The Project is estimated to generate $1.645 million in annual sales with costs of $610,000. If the tax rate is 27.00% what is the OCF per year (OCF will be the same for the three years) for this project? Group of answer choices $650,058.06 $715,063.86 $786,570.25 $865,227.27 $951,750.00arrow_forwardte.3arrow_forwardEsfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.18 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1730000 million in annual sales, with costs of $640,000. The tax rate is 24 percent. If the required return is 13 percent, what is the project's NPV? please answer fast i give upvotearrow_forward
- H. Cochran, Inc., is considering a new three-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 three-year tax life, after which time it will be worthless. The project is estimated to generate $2.23 million in annual sales, with costs of $1.25 million. Assume the tax rate is 23 percent and the required return on the project is 14 percent. What is the project's NPV? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Net present valuearrow_forwardEsfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2,350,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,830,000 in annual sales, with costs of $1,850,000. Assume the tax rate is 25 percent and the required return on the project is 11 percent. What is the project’s NPV?arrow_forwardSummer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2,098,350. 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 $1,814,883 in annual sales, with costs of $1,675,390. If the tax rate is 0.33 , what is the OCF for this project?arrow_forward
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