Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- Chase Brew Inc is considering an investment with the following information: initial investment in assets = $1,600,000 to be depreciated to $0 via straight-line method over 8-year project life sales will increase by $1,750,000/year expenses will increase by $1,240,000/year firm's marginal tax rate is 28% What is the incremental after-tax cash flow (OCF) per year associated with the following project? Enter answer in dollars, rounded to the nearest dollar.arrow_forwardCalculate Projects annual net cash inflows,net present Value,profitability Index and Internal rate of return.arrow_forwardProject Cash Flow The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of it new proposed service: Projected sales Ⓡ Operating costs (not including depreciation) 24 million 13 million. Depreciation $6 million Interest expense $ 3 million. The company faces a 25% tax rate. What is the project's cash flow for the first year (t = 1)? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar.arrow_forward
- A company is considering a project with a cost of $248,000. The cash flows for the project are provided in the table below. If the required return for the project is 14.2%, what is the project's NPV? Year CF 1 $68,500 2 $72,800 3 $75,300 4 $81,400 5 $78,200 $81,422 $128,200 $6,481 $222,838 $254,481arrow_forwardA project that provides annual cash flows of $12,600 for 12 years costs $65,000 today. At what rate would you be indifferent between accepting the project and rejecting it? Answer with Excel functionsarrow_forwardProject Cash Flow The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales $22 million Operating costs (not including depreciation) $12 million Depreciation $6 million Interest expense $3 million The company faces a 25% tax rate. What is the project's operating cash flow for the first year (t = 1)? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar.arrow_forward
- Project Cash Flow The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales $20 million Operating costs (not including depreciation) $9 million Depreciation $6 million Interest expense $3 million The company faces a 25% tax rate. What is the project's operating cash flow for the first year (t = 1)? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar. $arrow_forwardIn your first job with TBL Inc. your task is to consider a new project whose data are shown below. What is the project's Year 1 cash flow? The annual operating cash flows of the project can be calculated as follows: OCF = {[Sales - Operating Costs]*(1-Tax Rate)} + (Depreciation * Tax Rate) Sales revenues $225,250 Depreciation $78,847 Other operating costs $92,000 Tax rate 18%arrow_forwardhe financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales $20 million Operating costs (not including depreciation) $7 million Depreciation $4 million Interest expense $4 million The company faces a 25% tax rate. What is the project's operating cash flow for the first year (t = 1)? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar.arrow_forward
- BHT Company evaluates a project for a potential inclusion in its capital budget. In the first year of the project, it expects incremental net income of $33 million, depreciation expenses of $8 million and an increase in net working capital of $2 million. What is the estimated incremental free cash flow in the first year of the project? $29 mil $39 mil $42 mil $19 mil $36 mil $22 milarrow_forwardColsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The assets required for the project were fully depreciated at the time of purchase. The financial staff has collected the following information on the project: Sales revenues $20 million Operating costs 16 million Interest expense 2 million The company has a 25% tax rate, and its WACC is 13%. Write out your answers completely. For example, 13 million should be entered as 13,000,000. What is the project's operating cash flow for the first year (t = 1)? Round your answer to the nearest dollar.$ If this project would cannibalize other projects by $1.5 million of cash flow before taxes per year, how would this change your answer to part a? Round your answer to the nearest dollar.The firm's OCF would now be $ .arrow_forwardWaiting for Correct Answerarrow_forward
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