Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Problem 1
The Bird Co. is considering a 7-year project that would require a cash outlay of $160,000 for machinery and an additional $25,000 for working capital that would be released at the end of the project. The equipment would be
- What is the discounted payback based upon the initial
cash outflows ? - What is the
net present value ? - What is the
internal rate of return ?
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- Please answer fast i give you upvotearrow_forward1. Batinah Water Desalination project is a 15 year project. The project manager estimated that net initial investment expend in year zero is 100 million rials. The investment will be depreciated on a straight line basis to a 10 million book value by enc the project. During the operating phase revenue per year is 35 million and expense per year is estimated to be 20 million ria per year for 15 years. In year 15 net salvage value is estimated to be 15 million. WACC is estimated to be 10%. Tax Rate 209 1. Calculațe annual depreciation expenses 2. Calculate cash flow after tax CFAT in year 5 3. Calculate net present value. 4. Is it a good project Only final answers are requiredarrow_forwardNational Integrated Systems (NIS), a global provider of heating and air conditioning is planning a project whose data is provided below. The project’s equipment has a 3 year tax life after which its salvage value will be zero. The machinery will be depreciated on a straight line basis over three years. Revenues and other operating costs are expected to be constant over the project’s life. What is the project’s cash flow in Year 1? Equipment Cost = $130,000Depreciation rate = 33.33%Annual Sales Revenue= $120,000Operating Costs (ex Depreciation) = $50,000 Tax Rate = 35%arrow_forward
- Need help with the questionsarrow_forwardGive typing answer with explanation and conclusion Consolidated Industries is considering a 4- year project. The project is expected to generate operating cash flows of $2 million, $6, million, $5 million, and $3 million over the four years, respectively. It will require initial capital expenditures of $12 million dollars and an intitial investment in NWC of $6 million. The firm expects to generate a $8 million after tax salvage value from the sale of equipment when the project ends, and it expects to recover 100% of its nwc investments. Assuming the firm requires a return of 10% for projects of this risk level, what is the project's NPV? $4,061,769 $3,854,536 $3,937,429 $3,771,643 $4,144,662arrow_forwardA project will increase sales by $60,000 and cash expenses by $51,000. The project will cost $40,000 and will be depreciated using straight- line depreciation to a zero book value over the 4-year life of the project. The company has a marginal tax rate of 35%. What is the operating cash flow of the project using the tax shield approach? O $9,350 O $9,700 O $8,650 O $5,850arrow_forward
- 3. Your company has been presented with an opportunity to invest in a project. The facts on the project are presented below: The project is expected to operate as shown for ten years. If management expects to make 15% on its investments before taxes, would you recommend this project? Solve the Problem using Present Worth Method. * Investment Required Salvage Value after 10 Years Gross Income Annual Operating Costs: Php 50,000,000 Php 18,000,000 Labor Php 2,500,000 Php 1,000,000 Php 1,000,000 Php 500,000 Materials, Licenses, Insurance, etc* Fuel and Other Costs Maintenance Costsarrow_forwardProject 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. $435arrow_forwardPlease solve cash flow for year 1, 2, and 3. Also NPVarrow_forward
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