Question 5 - Estimating cash flows For each of the following cash flows, indicate whether it should be included in the calculations evaluating an investment project lasting three years. Explain why. a. A new machine bought for the project. b. The annual depreciation expense (straight line depreciation rule used) for this machine. c. Tax benefits on depreciation for the machine. d. Net working capital expenditures of £6,000 in year 0; £8,000 in year 1; £4,000 in year 2; 0 in year 3. e. Consultancy fee to identify the right machine for the job. f. Use of 20% capacity (otherwise not utilized) of another machine bought for another project for £15,000. g. Dividends paid to shareholders funded by the revenue from this project. h. Sale of the old machine you are replacing with this new project.

Question content area top Part 1 ​(IRR calculation​) Determine the IRR on the following​ projects:   a. An initial outlay of ​$13,000 resulting in a single free cash flow of ​$17,165 after 9 years b. An initial outlay of ​$13,000 resulting in a single free cash flow of ​$46,394 after 15 years c. An initial outlay of ​$13,000 resulting in a single free cash flow of $105,001after 25 years d. An initial outlay of ​$13,000 resulting in a single free cash flow of ​$13,653 after 4 years

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c. A company is planning to invest in a project over a 5-year period, but wants to know its financial implications. It expects the cash in-flow return on the investment to steadily increase over the 5 years.  Using the information below, help determine the Total Net Cash Flows, the Net Present Value and the estimated Payback Period. Note:  Estimate the payback period to the nearest year.                           Discount Rate 12%                             Investment Project Cash Flow Total Net Cash Flow           Initial Investment $         (5,000) ?            Year 1 $          800 ?            Year 2 $          900 ?            Year 3 $           1,500 ?            Year 4 $           1,800 ?            Year 5 $           3,200 ?                            NPV of investment ?            Estimated Payback Period

An organisation is considering  a capital investment  in new equipment . • The estimateed cash flows are as follows: • Year                                Cash flow •                                                  $ •0                                        ( $240000) •1                                             80000 •2                                             32000 •3                                             80000 •4                                             40000 •5                                             24000 •Calculate the IRR of the project to assess whether it should be undertaken.

2. Calculating Project NPV The Fleming Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 22 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Investment Sales revenue Operating costs Depreciation Net working capital spending Year 0 $32,800 450 Year 1 Year 2 Year 3 Year 4 $14,200 2,100 8,200 175 $15,900 $15,700 2,100 2,100 8,200 8,200 250 275 $12,900 2,100 8,200 ? a. Compute the incremental net income of the investment for each year. b. Compute the incremental cash flows of the investment for each year. c. Suppose the appropriate discount rate is 12 percent. What is the NPV of the project?

Company Express S. A. asks you to construct cash flows for following three (3) investment projects, containing following information:PROJECT 1a. Sales (in ThCh$):- Year 1: 90,000- Year 2: 55,000- Year 3: 75,000- Year 4: 190,000b. Cost of sales is estimated at 53% of sales.c. Depreciation for year is ThCh$ 15,000 per period (period 1 to 3). In year 4 there is a sale of machinery that results in a gain on sale of non-current assets of ThCh$ 9,800. Total depreciation for year 4 is ThCh$ 12,500.d. Administrative expenses are equivalent to 17% of sales.e. In period 0 there is an investment of ThCh$ 58,000.f. There is credit financing of ThCh$ 32,000 which is amortized in equal parts of ThCh$ 8,000 per period with a financial expense of ThCh$ 3,700 per period.g. There is an investment in working capital of ThCh$ 24,000 in period 0, which is recovered in period 4.h. In period 4 there is an investment in land of ThCh$ 40,000.i. Income tax rate is 17%. Calculate: cash flow per period. Please…

What is Question Four a. Assume that Green Housing Company is considering an investment of $200,000 in a new at the end of its useful life. The annual cash inflows are £250,000, and the annual cash outflows equipment. The new equipment is expected to last 12 years. It will have a zero salvage value are 150,000. Assume that the annual cash flows are uniform over the asset's useful life. Management has a required rate of return of 18%. i. Calculate the present value of net cash flows ii. Calculate the net present value for this investment iii. Calculate the Discounted Payback Period iv. Advice management of Green Housing Company base on your results