Homework Answers
| EBITDA Per year | 6000 | |
| Less | Deduction on account of 30% Tax | 1800 |
| Add | Saving of 30% Tax by paying interest | 236 |
| (785*30%) | ||
| Net | 4436 |
| Sum Total | ||||||
| Y1 | Y2 | Y3 | Y4 | |||
| A | Cash Flow for business (Incl for loan ) | 4436 | 4436 | 4436 | 4436 | |
| B | Discounted @ 1/1.068^ Year | 0.93633 | 0.876713 | 0.820892 | 0.768626 | |
| C | P.V (Cash Flow * Disc Factor) | 4153.09 | 3888.661 | 3641.068 | 3409.24 | 15092.06 |
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Question 10 3 pts Consider a firm with the following parameters: Physical Lifespan 4 years Capital...
Please answer both. Carry out calculations to at least 4 decimal places. Enter percentages as whole...
Please answer both. Carry out
calculations to at least 4 decimal places. Enter percentages as
whole numbers. Example: 3.03% should be entered as 3.03. Do not
include commas or dollar signs in numerical answers.
D Question 1 3 pts Consider a firm with the following parameters: Physical Lifespan Capital Expense, Year 0 EBITDA/Year Overall Firm Cost of Capital Tax Rate Loan Interest Payments Depreciation Project Life 7 years $13,000 $9,000 9AY。 38% $16,000 $551 4 years What is the total...
Consider the following debt-free project for a machine: Physical Lifespan 7 years Capital Expense, Year 0...
Consider the following debt-free project for a machine: Physical Lifespan 7 years Capital Expense, Year 0 $14,000 EBITDA / Year $8,000 Cost of Capital 9.9% Tax Rate 39% Depreciation Life 4 years What is the value of this project? Carry out calculations to at least 4 decimal places. Enter percentages as whole numbers. Example: 3.03% should be entered as 3.03. Do not include commas or dollar signs in numerical answers.
Please answer both Carry out calculations to at least 4 decimal places. Enter percentages as whole...
Please answer both
Carry out calculations to at least 4 decimal places. Enter
percentages as whole numbers. Example: 3.03% should be entered as
3.03. Do not include commas or dollar signs in numerical
answers.
DQuestion 5 3 pts A firm with yearly net income of $33,000 has only two customers, each of whom makes identical purchases once per year. Timely Tom makes his purchase today and at the start of next year, while Late Louie makes his purchase half a...
question 1 ans 2 Question 1 (10 points) A firm plans to build a plant on land it owns. The firm paid $200,000 for the land 30 years ago. Its current market value is $2,000,000. Construction costs, in...
question 1 ans 2
Question 1 (10 points) A firm plans to build a plant on land it owns. The firm paid $200,000 for the land 30 years ago. Its current market value is $2,000,000. Construction costs, including machinery, will require an initial outlay of $20,000,000. The project will create sales of $12,000,000 per year for years 1 10. No change in other operating costs is expected. The firm uses straight line depreciation over the 10 year life of the...
Assume the following for a firm that will operate for only three years. Year Zero: Capital...
Assume the following for a firm that will operate for only three years. Year Zero: Capital Investment = $4M and increase in NWC = $0.2M; Years 1-3: NI = $3M, Depreciation = $0.1M, Interest expense = $0.1M; Year 3: Recovery of earlier increase in NWC (i.e., decrease NWC by $0.2M), and in addition Cash Flow from Salvage = $3M. Suppose the tax rate is 30% for the firm. What is the IRR based on the FCFs for this firm in...
Additional Information for All Question: Return on market is 10%, retun on T-bills is 4% and...
Additional Information for All Question: Return on market is 10%, retun on T-bills is 4% and companies pay 40% corporate tax and 30% capital gains tax.. Aston Inc is a company that has a cost of capital of 16%. It is considering either leasing or purchasing a new machine for a project that still has 3 years of useful economic life left Aston Inc is currently using an old machine that is fully depreciated and amortized After accounting for revenue...
Capital Budgeting Problem Parameters: Consider the following expansion capital budgeting problem. The project is expected to...
Capital Budgeting Problem Parameters:
Consider the following expansion capital budgeting
problem.
The project is expected to have a 6-year life for the
firm. currently has a book value (BV) of $200k and an estimated
market salvage value of $375k. The new project will require new
equipment costing $2000k, which will be depreciated straight-line
to a book value of $200k at the end of 6
years.
generate an immediate tax credit of 5% of the
equipment’s cost.
The expansion will require...
In the question below the firm is purchasing a cash register system for $1,075,733. As a...
In the question below the firm is purchasing a cash register system for $1,075,733. As a consultant you were asked to evaluate a lease versus buy analysis on the purchase of a new front end cash register system for a clothing store called More Clothes. The cost of the front end system was given in the first question. The owners of the store will obtain a loan for 8% for the full amount of the system. The loan would be...
22 - Celsius Corp. is conducting a capital budgeting analysis to decide whether to invest in...
22 - Celsius Corp. is conducting a capital budgeting analysis to decide whether to invest in a new project which has an expected life of 5 years. The following information is available: The installed cost of the new equipment is $360,000. Installation will cost an additional $40,000 The equipment will be depreciated using 5-year MACRS depreciation over the 5-year life of the project. An initial NOWC investment equal to 10 percent of year 1 sales will also be required. The...
I know that capital losses may be carried backwards 3 years and forward 5 years but...
I know that capital losses may be carried backwards 3 years and
forward 5 years but how come in this problem we have a loss of
10,000 we do don't take it out of income before applying taxes?
what if in this problem we had a capital gain and a loss? would you
subtract the loss from the gain and include that number in the tax
liability calculation? please explain
Question 2 0/1 pts Last year, your company had sales...
Please answer both. Carry out
calculations to at least 4 decimal places. Enter percentages as
whole numbers. Example: 3.03% should be entered as 3.03. Do not
include commas or dollar signs in numerical answers.
D Question 1 3 pts Consider a firm with the following parameters: Physical Lifespan Capital Expense, Year 0 EBITDA/Year Overall Firm Cost of Capital Tax Rate Loan Interest Payments Depreciation Project Life 7 years $13,000 $9,000 9AY。 38% $16,000 $551 4 years What is the total...
Please answer both
Carry out calculations to at least 4 decimal places. Enter
percentages as whole numbers. Example: 3.03% should be entered as
3.03. Do not include commas or dollar signs in numerical
answers.
DQuestion 5 3 pts A firm with yearly net income of $33,000 has only two customers, each of whom makes identical purchases once per year. Timely Tom makes his purchase today and at the start of next year, while Late Louie makes his purchase half a...
question 1 ans 2
Question 1 (10 points) A firm plans to build a plant on land it owns. The firm paid $200,000 for the land 30 years ago. Its current market value is $2,000,000. Construction costs, including machinery, will require an initial outlay of $20,000,000. The project will create sales of $12,000,000 per year for years 1 10. No change in other operating costs is expected. The firm uses straight line depreciation over the 10 year life of the...
Additional Information for All Question: Return on market is 10%, retun on T-bills is 4% and companies pay 40% corporate tax and 30% capital gains tax.. Aston Inc is a company that has a cost of capital of 16%. It is considering either leasing or purchasing a new machine for a project that still has 3 years of useful economic life left Aston Inc is currently using an old machine that is fully depreciated and amortized After accounting for revenue...
Capital Budgeting Problem Parameters:
Consider the following expansion capital budgeting
problem.
The project is expected to have a 6-year life for the
firm. currently has a book value (BV) of $200k and an estimated
market salvage value of $375k. The new project will require new
equipment costing $2000k, which will be depreciated straight-line
to a book value of $200k at the end of 6
years.
generate an immediate tax credit of 5% of the
equipment’s cost.
The expansion will require...
I know that capital losses may be carried backwards 3 years and
forward 5 years but how come in this problem we have a loss of
10,000 we do don't take it out of income before applying taxes?
what if in this problem we had a capital gain and a loss? would you
subtract the loss from the gain and include that number in the tax
liability calculation? please explain
Question 2 0/1 pts Last year, your company had sales...
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