F Question Viewer Cost of Goods Sold - Depreciation = EBIT - Taxes (20%) = Unlevered net income + Depreciation - Additions to Net Working Capital - Capital Expenditures = Free Cash Flow O A. 17% OB. 30% OC. 25% O D. 22% Year O 0000 Year 1 424897.541 - 165000 Year 2 424897.541 - 165000 _-85000_ _-85000__ __-85000___ 174897.541 174897.541 174897.541 -34979.508 139918.033 _-400000__ -34979.508_-34979.508 139918.033 85000 - 20000 139918.033 85000 - 20000 Year 3 424897.541 - 165000 204918.033 204918.033 204918.033 Visby Rides, a livery car company, is considering buying some new luxury cars. After extensive research, they come up with the above estimates of free cash flow from this project. By how much could the discount rate rise before the net present value (NPV) of this project is zero, given that it is currently 8%? 85000 - 20000

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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F Question Viewer
Cost of Goods Sold
- Depreciation
= EBIT
- Taxes (20%).
= Unlevered net income
+ Depreciation
- Additions to Net Working Capital
- Capital Expenditures
= Free Cash Flow
Year 0
A. 17%
B. 30%
C. 25%
D. 22%
_-400000_
Year 1
424897.541
- 165000
- 85000
174897.541
- 34979.508
139918.033
85000
- 20000
Year 2
424897.541
- 165000
- 85000
174897.541
- 34979.508
139918.033
85000
- 20000
Year 3
424897.541
- 165000
- 85000
174897.541
- 34979.508
139918.033
85000
- 20000
204918.033
204918.033
204918.033
Visby Rides, a livery car company, is considering buying some new luxury cars. After extensive research, they come up with the above estimates of free cash flow from this project. By how much could the
discount rate rise before the net present value (NPV) of this project is zero, given that it is currently 8%?
Transcribed Image Text:F Question Viewer Cost of Goods Sold - Depreciation = EBIT - Taxes (20%). = Unlevered net income + Depreciation - Additions to Net Working Capital - Capital Expenditures = Free Cash Flow Year 0 A. 17% B. 30% C. 25% D. 22% _-400000_ Year 1 424897.541 - 165000 - 85000 174897.541 - 34979.508 139918.033 85000 - 20000 Year 2 424897.541 - 165000 - 85000 174897.541 - 34979.508 139918.033 85000 - 20000 Year 3 424897.541 - 165000 - 85000 174897.541 - 34979.508 139918.033 85000 - 20000 204918.033 204918.033 204918.033 Visby Rides, a livery car company, is considering buying some new luxury cars. After extensive research, they come up with the above estimates of free cash flow from this project. By how much could the discount rate rise before the net present value (NPV) of this project is zero, given that it is currently 8%?
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