Project Beta is a 7-year project which requires an initial outlay of $6,000. This outlay will be depreciated using straight-line depreciation over the life of the project. It will generate incremental revenue of $2400 per year and incremental costs (excluding depreciation) of $300. The tax rate is 35%. What is the project's annual after-tax incremental earnings? Question 3Answer a. $135 b. $808 c. $251 d. $435
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Project Beta is a 7-year project which requires an initial outlay of $6,000. This outlay will be
What is the project's annual after-tax incremental earnings?
Question 3Answer
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- Project Beta is a 7-year project which requires an initial outlay of $6,000. This outlay will be depreciated using straight-line depreciation over the life of the project. It will generate incremental revenue of $2400 per year and incremental costs (excluding depreciation) of $300. The tax rate is 35%. What is the project's annual incremental EBIT? Question 4Answer a. $2614 b. $2957 c. $1243 d. $386q4b- Project A requires an initial outlay of $10000 and will last for 5 years. The investment will be depreciated using straight‐line depreciation to a book value of 0 over the life of the project. The corporate tax rate is 30% and the required rate of return is 8%. What is the annual depreciation tax shield for Project A?q4d-Project A requires an initial outlay of $10000 and will last for 5 years. The investment will be depreciated using straight‐line depreciation to a book value of 0 over the life of the project. The corporate tax rate is 30% and the required rate of return is 8%. What is the present value of Project A’s depreciation tax shields?
- q4c- Project A requires an initial outlay of $10000 and will last for 5 years. The investment will be depreciated using straight‐line depreciation to a book value of 0 over the life of the project. The corporate tax rate is 30% and the required rate of return is 8%. What is the total depreciation tax shield over the life of Project A?Question Green Landscaping, Inc. is using net present value (NPV) when evaluating projects. Green Landscaping's cost of capital is 8.04 percent. What is the NPV of a project if the initial costs are $1,915,222 and the project life is estimated as 10 years? The project will produce the same after-tax cash inflows of $698,670 per year at the end of the year. Round the answer to two decimal places. check_circle Expert Answer thumb_up thumb_down Step 1 Given information is: Initial investment = $19,15,222 Project life = 10 years Annual cash inflow = $698,670 Cost of capital = 8.04% Step 2 Net present value of project = Present value of cash inflows - Initial investment I don't understand how this answer is derived (in bold). Present value of cash inflows = (Annual cash inflows * Present value factor @8.04% for 10 years) = 698670 * 6.6979 = $46,79,621.79 Net present value of project = 46,79,621.79 - 1915222 = $27,64,399.79A project requires an increase of $2100 in Net Working Capital at the beginning of the project, which will be fully recovered after the completion of the project. Equipment with a book value of $11,000 will be sold at the end of the project for a salvage value of $6,000. The tax rate is 20%. What is the incremental free cash flow in the year following the end of the project? Question 3Answer a. $9100 b. $7100 c. $4900 d. $2900
- a project with the life of six years is expected to provide annual sales of $300,000 and cost $25,000 the project will require an investment in equipment of $550,000 which will be depreciated on a straight line method over the life of the project you feel that both sides and costs are accurate to plus or minus 15%, the tax rate is 21%, what is the annual operating cash flow for the best case scenario a $154, 143 b 102, 450c 48, 217 d122, 000 42 or e104, 967es A 7-year project is expected to provide annual sales of $221,000 with costs of $97,500. The equipment necessary for the project will cost $360,000 and will be depreciated on a straight-line method over the life of the project. You feel that both sales and costs are accurate to +/-15 percent. The tax rate is 21 percent. What is the annual operating cash flow for the worst-case scenario? Multiple Choice $77,946 O $44,504 $70,623 $129,329 $49.221q4- Project A requires an initial outlay of $10000 and will last for 5 years. The investment will be depreciated using straight‐line depreciation to a book value of 0 over the life of the project. The corporate tax rate is 30% and the required rate of return is 8%. What is the annual depreciation amount for Project A?
- Project Beta is a project which will last for 7 years and which requires an initial outlay of $3,000. This outlay will be depreciated using straight-line depreciation over the life of the project. It will generate incremental revenue of $1200 per year. The value of incremental, after-tax earnings is $400 per year. The project will require Net Working Capital equal to 10% of incremental revenue. What is the value of incremental free cash flow in Year 0? Question 5Answer a. $-3120 b. $2880 c. $-2880 d. $31207.2 Project Beta is a project which will last for 5 years and which requires an initial outlay of $4,000. This outlay will be depreciated using straight-line depreciation over the life of the project. It will generate incremental revenue of $2600 per year. The value of incremental, after-tax earnings is $888 per year. The project will require Net Working Capital equal to 10% of incremental revenue. What is the value of incremental free cash flow in Years 1 to 5? a. $1688 b. $88 c. $-88 d. $-1688What is the IRR for the following project if its initial after tax cost is $5,000,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3 and $1,500,000 in year 4? 13.57% 14.77% 15.57% none of the above
