project requires initial asset investment of $1 million. The asset will last for 8 years, and will be depreciated for tax purposes at the CCA rate of 30%. The required. turn on this project is 16%, and the marginal corporate tax rate is 36%. Assuming that the asset will have a salvage value of $50,000 at the end of Year 8. what is we present value of the CCA tax shields from this project? Multiple Choice 204.111.57 $215.009.97 $218.59071 $234.782.01
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- A project requires an initial investment of $6 million and will yield operating cash flows of $1.5 million per year for the next 10 years. At the end of 10 years, the project’s assets can be divested for $350,000. The marginal tax rate is 35%, and the CCA rate is 30%. If the required rate of return is 15%, what is the present value of the CCA tax shields? Select one: a. $1,329,042.73 b. $1,308,432.91 c. $1,288,508.90 d. $1,210,537.92 e. $1,049,551.30An investment has an initial cost of $3.2 million. This investment will be depreciated by $900,000 a year over the 3-year life of the project. Should this project be accepted based on the average accounting rate of return if the required rate is 10.5 percent? Why or why not? Net Income $211.700 186.400 Year 165,500 O Yes; because the AAR is 10.5 percent O Yes; because the AAR is less than 10.5 percent O Yes; because the AAR is greater than 10.5 percent O No; because the AAR is greater than 10.5 percent O No; because the AAR is less than 10.5 percentq4d-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?
- 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. $435Consider an asset that costs $311,000 and is depreciated straight-line to zero over its six-year tax life. The asset is to be used in a four-year project; at the end of the project, the asset can be sold for $58,000. If the relevant tax rate is 34 percent, what is the aftertax cash flow from the sale of this asset? Can the calculator and excel solution be provided?You need to determine the viability of a project. The project will cost $650,000 today and have a life of 8 years. It has an unusal CCA rate of 14.0% and is expected to be sold for $100,000 at the end of the project's life. Annual sales revenue is expected to be $585,000 and annual costs are expected to be $465,000. The tax rate is 35.0% and the project's discount rate is 8.5%. Part A: Compute the NPV of the project and state whether you should proceed or not. Part B: Oops - the accountants made a mistake! The actual CCA rate is: 17.0%. Assuming all else is equal, compute the NPV of the project using the new CCA rate and state how much this improves or reduces the NPV of the project.
- A company is considering two separate mutually exclusive projects A and B. Project A requires an initial investment of $100,000 and is expected to generate after-tax cash flows of $15,000 per year forever. Project B requires an initial investment of $150,000 and is expected to generate after-tax cash flows of $18,000 per year forever. Which of the following statement is correct? O a. Select Project B when the discount rate is 11% Ob. Select Project A when the discount rate is 16% Oc Select Project A when the discount rate is 5% O d. Select Project A when the discount rate is 13% O e. Select Project A when the discount rate is 4%A proposed cost-saving device has an installed cost of $730,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $140,000, the marginal tax rate is 22 percent, and the project discount rate is 10 percent. The device has an estimated Year 5 salvage value of $101,000. What level of pretax cost savings do we require for this project to be profitable? (MACRS schedule) (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Pretax cost savings $ 216,693.043. A proposed cost-saving device has an installed cost of $450,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $30,000, the marginal tax rate is 35 percent, and the project discount rate is 12 percent. The device has an estimated Year 5 salvage value of $75,000. What level of per year pretax cost savings do we require for this project to be profitable?
- q4b- 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?The asking price (initial investment) for a project is $290,000. The end of year after tax cash flows from operations associated with this project will be $80,000 for year 1; $80,000 for year 2; -$110,000 for year 3; and $300,000 for end of year four. What is an IRR for this project? How many IRRs are possibleA project requires you to invest $10,000 now, will generate annual revenues of $1500 for 10 years and will have a salvage value of $800 at the end of year 10. If your MARR is %10 per year, is this project acceptable? Select one: a. Yes, and its PW=$525.3 X b. No, and its PW =-$1474.7. c. Yes, and its PW=$1525.3 d. No, and its PW =-$474.7