Ind ing Nothing is evaluating a new 6-year project that will have annual sales of $390,000 and costs of $272,000. The project will require fixed assets of $490,000, which will be depreciated on a 5-year MACRS schethe annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 1152 percent, 1152 percent, and 576 percent, respectively. The company has a tax rate of 34 percent. What is the operatingow for Year 37Maple ChoceOO109.973$100$105.647$2.072172307

Sales= $390,000. Cost= $272,000Depreciation= $490,000*19.20% = $94,080Profit before tax = Sales-…

Answered: ing Nothing is evaluating a new 6-year…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 13P

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Postman Company is considering two independent projects. One project involves a new product line, and the other involves the acquisition of forklifts for the Materials Handling Department. The projected annual operating revenues and expenses are as follows: Required: Compute the after-tax cash flows of each project. The tax rate is 40 percent and includes federal and state assessments.
The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?
A company is considering a new 6-year project that will have annual sales of $234,000 and costs of $146,000. The project will require fixed assets of $265,000, which will be depreciated on a 5-year MACRS schedule. The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, 11.52 percent, and 5.76 percent, respectively. The company has a tax rate of 34 percent. What is the operating cash flow for Year 2? a. 68460 b. 86912 c. 58752 d. 73097 e. 75379
King Nothing is evaluating a new 6-year project that will have annual sales of $425,000 and costs of $293,000. The project will require fixed assets of $525,000, which will be depreciated on a 5-year MACRS schedule. The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, 11.52 percent, and 5.76 percent, respectively. The company has a tax rate of 35 percent. What is the operating cash flow for Year 3? Multiple Choice $81,480 $106,968 $116,425 $121,080 $151,320
A company is considering a new 6-year project that will have annual sales of $237,000 and costs of $148,000. The project will require fixed assets of $267,000, which will be depreciated on a 5-year MACRS schedule. The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, 11.52 percent, and 5.76 percent, respectively. The company has a tax rate of 22 percent. What is the operating cash flow for Year 2? Multiple Choice $79,210 $88,217 $76,187 $38,377 $80,698
a company is evaluating new 4-year project. The necessary fixed assets will cost $157,000 and be depreciated on a 3-year MACRS and have no salvage value. The MACRS percentages each year are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. The project will have annual sales of $98,000, variable costs of $27,400, and fixed costs of $12,000. The project will also require net working capital of $2,600 that will be returned at the end of the project. The company has a tax rate of 21 percent and the project's required return is 10 percent. What is the net present value of this project
Bad Company has a new 4-year project that will have annual sales of 8,400 units. The price per unit is $19.90 and the variable cost per unit is $7.65. The project will require fixed assets of $94,000, which will be depreciated on a 3-year MACRS schedule. The annual depreciation percentages are 33.33 percent, 44 45 percent, 14.81 percent, and 7.41 percent, respectively. Fixed costs are $34,000 per year and the tax rate is 21 percent. What is the operating cash flow for Year 3? Mutiple Choice $56.650 $57354 $53,464 $20359
The lovely company has a new 4-year project that will have annual sales of 9,300 units. The price per unit it $20,80 and the variable cost per unit is $8.55. The project will require fixed assets of $103.000, which will be depreciated on a 3 year MACRS schedule. The annual depreciation percentages are 33.33 percent, 44.45 percent, 14.81 percent, 7.41 percent, respectively. Fixed costs are $43,000 per year and the tax rate is 34 percent. What is the operating cash flow for year 3?
Brummitt Corp., is evaluating a new 4 - year project. The equipment necessary for the project will cost $2, 950, 000 and can be sold for $319,000 at the end of the project. The asset is in the 5-year MACRS class. The depreciation percentage each year is 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company's tax rate is 35 percent. What is the aftertax salvage value of the equipment?
Perego Company is considering a new equipment which will cost $75,000 today. The equipment would be depreciated on a straight-line basis over the project's 3-year life, would have a zero-salvage value, and would require additional net operating working capital of $18,000. The annual sales revenues of the project are $100,000, and annual operating cost except depreciation is $45,000. Revenues and other operating costs are expected to be constant over the project's life. Perego Company tax rate is 35.0% and its cost of capital is 13.35 percent. What is the project's NPV, what the project's MIRR?
Bad Company has a new 4-year project that will have annual sales of 8,400 units. The price per unit is $19.90 and the variable cost per unit is $7.65. The project will require fixed assets of $94,000, which will be depreciated on a 3-year MACRS schedule. The annual depreciation percentages are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. Fixed costs are $34,000 per year and the tax rate is 25 percent. What is the operating cash flow for Year 3? $20,705 $80,655 $57,550 $55,155 $60,744
Mountain Frost is considering a new project with an initial cost of $205,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $20,000, $20,900, $24,600, and $16,900, respectively. What is the average accounting return? Please make sure its correct

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