Homework Answers
| Answer | |
| Explanation : | |
| Particulars | Amount |
| Annual cash inflow from operations from its investment in a capital asset | $ 39,000 |
| Less : Income Tax @30% | $ 11,700 |
| Net Cash flow for 1 year | $ 27,300 |
| Net Cash inflow from operations for 6 years | $ 1,63,800 |
| Therefore, The correct option is C) $1,63,800 | |
Add Answer to:
9.
The Ambitz Corporation has an annual cash inflow from operations from its investment in a...
Initial investment............... $80,000 Annual after-tax cash inflow............. ? Salvage value........................ $0 Net present value................ $13,600 Life...
Initial investment............... $80,000 Annual after-tax cash inflow............. ? Salvage value........................ $0 Net present value................ $13,600 Life of the project................ 7 years Discount rate........................ 12% Based on the data given above, the annual cash inflow from the project after the initial investment is closest to... (assume the after-tax cash flows are the same each year) Select one: a. $36,428 b. $22,766 c. $23,747 d. $20,509 e. $32,894
The management of Osborn Corporation is investigating an investment in equipment that would have a useful...
The management of Osborn Corporation is investigating an investment in equipment that would have a useful life of 8 years. The company uses a discount rate of 12% in its capital budgeting. The net present value of the investment, excluding the annual cash inflow, is -$407,414. How large would the annual cash inflow have to be to make the investment in the equipment financially attractive? (Ignore income taxes.) Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the...
A project requires an initial investment of $100,000 and is expected to produce a cash inflow...
A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $27,500 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 10%. Ignore inflation. a. Calculate project NPV for each company. (Do not...
A firm can purchase new equipment for a $11,000 initial investment. The equipment generates an annual...
A firm can purchase new equipment for a $11,000 initial investment. The equipment generates an annual after-tax cash inflow of $4,000 NPV and maximum return for 5 years. a. Determine the net present value (NPV) of the asset, assuming that the firm has a cost of capital of 10%. Is the project acceptable? b. Determine the maximum required rate of return that the firm can have and still accept the asset.
A project requires an initial investment of $100,000 and is expected to produce a cash inflow...
A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $27,700 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 11%. Ignore inflation. a. Calculate project NPV for each company. (Do not...
Fatima Corporation has the following information pertaining to the purchase of a new piece of equipment:...
Fatima Corporation has the following information pertaining to the purchase of a new piece of equipment: Cash revenues less cash expenses $40,000 per year Cost of equipment Salvage value at the end of the year Increase in working capital requirements $70,000 $7,000 $30,000 Tax rate Life 30 percent 6 years Cost of capital is 11 percent. Required (use excel): a. Calculate the following assuming straight-line depreciation: i. Calculate the after-tax net income for each of the six years. ii. Calculate...
2. Perkins Corporation is considering several investment proposals, as shown below: Investment Proposal A $136,000 $170,000...
2.
Perkins Corporation is considering several investment proposals, as shown below: Investment Proposal A $136,000 $170,000 $102,000 $127,500 $ 163,200 $ 255,000 $142,800 $288,000 Investment required Present value of future net cash flows If the project profitability index is used, the ranking of the projects from most to least profitable would be: The management of Osborn Corporation is investigating an investment in equipment that would have a useful life of 5 years. The company uses a discount rate of 12%...
1. a. Young Brains is considering expanding its current operations by adding new trucks to its...
1. a. Young Brains is considering expanding its current operations by adding new trucks to its fleet. The company expects to increase revenues with this asset expansion project. The firm plans to depreciate the trucks over a 6-year economic life using MACRS and to sell the trucks after 6 years. The firm’s marginal tax rate is 34%. The following are estimates of the project’s incremental cash flows: The purchase price of the trucks is ₵495,000. Delivery cost of ₵5,000 will...
A project requires an initial investment of $100,000 and is expected to produce a cash inflow...
A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $27,200 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 35% and can depreciate the investment for tax purposes using the five-year MACRS tax depreciation schedule. Suppose the opportunity cost of capital is 10%. Ignore inflation. a. Calculate project...
You are the CFO of a business and have the opportunity to evaluate two different investment...
You are the CFO of a business and have the opportunity to evaluate two different investment opportunities. Information related to these investments follows: Investment Cost Salvage Value Useful Life Required Rate of Return Sales Variable Costs Fixed Costs (excluding depreciation) Tax Rate Investment 1 $ 900,000 $ 90,000 9 years 10% $ 500,000 $ 200,000 $ 100,000 35% Investment 2 $ 600,000 $ 60,000 12 years 10% $ 500,000 $ 240,000 $ 120,000 35% Your company has a required rate...
The management of Osborn Corporation is investigating an investment in equipment that would have a useful life of 8 years. The company uses a discount rate of 12% in its capital budgeting. The net present value of the investment, excluding the annual cash inflow, is -$407,414. How large would the annual cash inflow have to be to make the investment in the equipment financially attractive? (Ignore income taxes.) Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the...
A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $27,500 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 10%. Ignore inflation. a. Calculate project NPV for each company. (Do not...
A firm can purchase new equipment for a $11,000 initial investment. The equipment generates an annual after-tax cash inflow of $4,000 NPV and maximum return for 5 years. a. Determine the net present value (NPV) of the asset, assuming that the firm has a cost of capital of 10%. Is the project acceptable? b. Determine the maximum required rate of return that the firm can have and still accept the asset.
Fatima Corporation has the following information pertaining to the purchase of a new piece of equipment: Cash revenues less cash expenses $40,000 per year Cost of equipment Salvage value at the end of the year Increase in working capital requirements $70,000 $7,000 $30,000 Tax rate Life 30 percent 6 years Cost of capital is 11 percent. Required (use excel): a. Calculate the following assuming straight-line depreciation: i. Calculate the after-tax net income for each of the six years. ii. Calculate...
2.
Perkins Corporation is considering several investment proposals, as shown below: Investment Proposal A $136,000 $170,000 $102,000 $127,500 $ 163,200 $ 255,000 $142,800 $288,000 Investment required Present value of future net cash flows If the project profitability index is used, the ranking of the projects from most to least profitable would be: The management of Osborn Corporation is investigating an investment in equipment that would have a useful life of 5 years. The company uses a discount rate of 12%...
You are the CFO of a business and have the opportunity to evaluate two different investment opportunities. Information related to these investments follows: Investment Cost Salvage Value Useful Life Required Rate of Return Sales Variable Costs Fixed Costs (excluding depreciation) Tax Rate Investment 1 $ 900,000 $ 90,000 9 years 10% $ 500,000 $ 200,000 $ 100,000 35% Investment 2 $ 600,000 $ 60,000 12 years 10% $ 500,000 $ 240,000 $ 120,000 35% Your company has a required rate...
Most questions answered within 3 hours.
-
After watching the lectures I am still having a hard time
understanding these equations.
1. The...
asked 36 minutes ago -
Testing:
H0:μ=56.9
H1:μ<56.9
Your sample consists of 23 subjects, with a mean of 56.3 and
standard...
asked 39 minutes ago -
straight wire, labeled as Wire A, lies horizontally on a
tabletop and is oriented to run...
asked 41 minutes ago -
For a Chi-Squared Goodness of Fit Test about a uniform
distribution, complete the table.
Round to...
asked 1 hour ago -
Milk of magnesia is only slightly soluble in water. Kc for the
reaction Mg(OHs)(s)>Mg2+(a) + 2OH-1(aq)...
asked 1 hour ago -
Excel's HYPGEOM.DIST function can be used to compute _____.
a. both hypergeometric probabilities and cumulative
hypergeometric...
asked 1 hour ago -
The rocket used for the human lunar missions was the Saturn V
rocket. At liftoff the...
asked 1 hour ago -
1. The East Street Bagel Shop has a weekly demand for 3,500
bagels, which they make...
asked 1 hour ago -
paraphrasing each paragraph
“Where two or more persons knowingly act together unlawfully,
the act of each...
asked 1 hour ago -
The lateral line system in fish is contained which of the
following?
chemoreceptors
photoreceptors
mechanoreceptors
odor...
asked 1 hour ago -
Find the y-intercept of y =-5 x. The y-intercept of y equals
negative 5 x is______...
asked 1 hour ago -
Customers arrive randomly at a gas station at the average rate
of 30 per hour, while...
asked 1 hour ago