Time line | 0 | 1 | 2 | 3 | 4 | 5 | |||
Cost of new machine | -675000 | ||||||||
Initial working capital | -51000 | ||||||||
=Initial Investment outlay | -726000 | ||||||||
100.00% | |||||||||
Depreciation | Cost of equipment/no. of years | -135000 | -135000 | -135000 | -135000 | -135000 | 0 | =Salvage Value | |
=after tax operating cash flow | 187600.00 | 187600.00 | 187600 | 187600 | 187600 | ||||
reversal of working capital | 51000 | ||||||||
+Proceeds from sale of equipment after tax | =selling price* ( 1 -tax rate) | 117650 | |||||||
+Tax shield on salvage book value | =Salvage value * tax rate | 0 | |||||||
=Terminal year after tax cash flows | 168650 | ||||||||
Total Cash flow for the period | -726000 | 187600.00 | 187600.00 | 187600.000 | 187600 | 356250 | |||
Discount factor= | (1+discount rate)^corresponding period | 1 | 1.15 | 1.3225 | 1.520875 | 1.7490063 | 2.0113572 | ||
Discounted CF= | Cashflow/discount factor | -726000 | 163130.4348 | 141852.552 | 123350.0452 | 107260.91 | 177119.21 | ||
NPV= | Sum of discounted CF= | -13287 |
5) Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing...
Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $697,000 that would be depreciated on a straight-line basis to zero over the 5-year life of the project. The equipment will have a market value of $192,000 at the end of the project. The project requires $62,000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow will be $187,600 a year. What is the net...
23. Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $708,000 that would be depreciated on a straight-line basis to a zero balance over the four-year life of the project. The equipment can be sold for $220,000 after the four years. The project requires $46,000 initially for net working capital, all of which will be recovered at the end of the project. The projected operating cash flow is $211,500 a year. What is the...
5) Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $675,000 that would be depreciated on a straight-line basis to zero over the 5-year life of the project. The equipment will have a salvage value of $181,000 at the end of the project. The project requires 551,000 initially for networking capital, which will be recovered at the end of the project. The operating cash flow will be $187.600 a year What is the net...
Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $685,000 that would be depreciated on a straight-line basis to zero over the 4-year life of the project. The equipment will have a market value of $186,000 at the end of the project. The project requires $56,000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow will be $210,600 a year. What is the net...
Question 20 1 points Save Answer Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing 5675.000 that would be depreciated on a straight-line basis to zero over the 5-year life of the project. The equipment will have a market value of $181.000 at the end of the project. The project requires 551.000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow will be $187,600...
Global Water Treatment, Inc. is analyzing a proposed investment that would initially require $750,000 of new equipment. This equipment would be depreciated on a straight-line basis to a zero balance over the four-year life of the project. The estimated salvage value is $150,000. The project requires $50,000 initially for net working capital, all of which will be recouped at the end of the project. The projected operating cash flow is $ 265,000 a year. What is the internal rate of...
Global Water Treatment, Inc. is analyzing a proposed investment that would initially require $750,000 of new equipment. This equipment would be depreciated on a straight-line basis to a zero balance over the four-year life of the project. The estimated salvage value is $150,000. The project requires $50,000 initially for net working capital, all of which will be recouped at the end of the project. The projected operating cash flow is $ 265,000 a year. What is the internal rate of...
Question 17 10 pts Western Tech is considering a new project that will require $118,000 of fixed assets and networking capital of $16,000. The fixed assets will be depreciated on a straight-line basis to a zero salvage value over three years. This project is expected to produce an operating cash flow of $45,000 the first year with that amount decreasing by 5 percent annually for two years before the project is shut down. The fixed assets can be sold for...
2. Bruno's Lunch Counter is expanding and expects operating cash flows of $26,000 a year for 4 years as a result. This expansion requires $39,000 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project requires $3,000 of net working capital, 100% of which will be recovered at he end of the project. What is the net present value of this expansion project at a required rate of return of 16...
1. Carson Trucking is considering whether to expand its regional service center in Maob, Utah. The expansion requires the expenditure of $10,000,000 on new service equipment and would generate annual net cash flows from reduced costs of operations equal to $2,500,000 per year for each of the next eight years. In Year 8 the firm will also get back a cash flow equal to the salvage value of the equipment, which is valued at $1 million. Thus in Year 8...