Below is the calculation of NPV for the above project:
As the NPV of after tax cash flow is $45999.69 i.e. more than zero, the firm should invest in the project.
please solve and show equations 315 A firm is considering investing $250,000 ir as a 3-year...
A firm is considering investing $15 million in machinery equipment that is expected to have a useful life of five years and is expected to reduce the firm's labor costs by $5 million per year. Assume the firm pays a 30% tax rate on accounting profits and uses the straight-line depreciation method. What is the after-tax cash flow from the investment in years 1 through 5? If the hurdle rate for this investment is 15% per year, is it worthwhile?...
please answer them all and mark the answers . thanks
A construction company is considering whether to lease or buy equipment for its new 4-year project. If they buy the equipment, it will have an initial investment cost of $630,000 with annual costs of $42.000. At the end of the 4 years the equipment can be sold for an estimated $378,000. For tax purposes, the company will use MACRS-ADS depreciation on the equipment. If they decide to lease, it will...
Your firm is considering investing in a small stand-alone plant. It will be located on a site that the firm currently owns. The firm paid $2,000,000 for this site seven years ago. They recently spent $100,000 to upgrade the site, in preparation for the project under consideration. Recently, they had an offer from the county government to buy the location for $925,000. The building and equipment needed for the operation will cost $2,400,000. These assets will be depreciated over six...
Question 1 Answer 1(a) & 1(d) Your company is considering a new 3-year project that requires an initial investment in equipment of $3 million. Prior to this, you had engaged a consultant to study the feasibility of the new project and after an extensive market survey, the consultant confirmed your belief that the project would be viable. Your company is charged $100,000 for the feasibility study. The equipment will be depreciated straight line to zero over the 3 years of...
Please show any and all work or sub-calculations.
A firm is considering purchasing new manufacturing equipment with a useful life of 5 years and a MACRS life of 3 Years. The cost of the new equipment is $62,400. The firm will dispose of existing equipment with an original cost of $29,000 and a book value of $12,000. The old equipment is becoming obsolete, and can only be sold for $9,000. The firm expects pre-tax cost reductions as a result of...
free cash flow; wacc, npv. please show work
1-3. Free Cash Flow; WACC; NPV (3 questions) 2015 2016 2017 2018 2021 Revenue EBIT + After Tax Capital Expenditure Dep. & Amortization Net Working Capital Change Free Cash Flow 142343 152235 106364 452242252214 1577 1823 1088 437 575 622 144978 3214 1657 1026 2019 2020 M&A 186152 205309 36214314 2606 2395 1066 1045 213635 5835 3123 1087 0 3382 4808 6090 77854342 1689 1539 1044 903 1178 1758 Other information Your...
1) A firm believes it can generate an additional $2,000,000 per year in revenues for the next 5 years if it purchases a new piece of equipment for $1,000,000. The firm does not expect to be able to sell the new equipment when it is finished using it (after 5 years). Variable costs are expected to be 48% of revenue annually. Assuming the firm uses straight-line depreciation and its marginal tax rate is 25%, what are the incremental annual operating...
1- You are a part of a finance team in a firm, and you were asked by your boss to estimate the annual cash flows of a project. You estimated that the annual sales and costs of this project is $150,000 and $25,000 respectively. In order to start the project, the firm needs to invest in $300,000 in new equipment including shipping and installation, and $30,000 in working capital. The life of this asset is 3 years, and the project...
Important: Show your solutions! QUESTION 1: Consider the following two projects: Year Cash Flow (A) Cash Flow (B) -$364,000 -$52,000 25,000 46,000 68,000 22,000 68,000 21,500 458,000 17,500 Whichever project you choose, if any, you require a return of 11 percent on your investment. 1) Suppose these two projects are independent. Which project(s) should you accept based on: a. The Payback rule? Explain. (1096) b. The Profitability Index rule? Explain. (10%) c. The IRR rule? Explain. (10%) d. The NPV...
when you solve this question can you please expand your answer by
showing it step by step . and draw a cash flow diagram
DEPRECIATION AND INCOME TAXES la) A machine is purchased for $20,000 and has an expected life of 5 years. The salvage value at the end of 5 years is $2,000. According to: 1) The Straight Line Depreciation 2) The Sum of the Yea's Digit (SOYD) depreciation, what is the book value of the machine at the...