Year | ||||
Sales revenues | 70000 | 0 | -65000 | |
Depreciation Rate = 33.333% | -25000 | 1 | 36883 | |
Operating income (EBIT) | -21665 | 2 | 36883 | |
Operating profit /ebit | 23336 | 3 | 36883 | |
Taxes Rate = 35% | -8167 | |||
Profit After-tax | 15168 | |||
Add depreciation | 21665 | |||
Operating net cash flow | 36883 |
answer = $ 26 584---NPV
Year | 1 | 2 | 3 |
Outflow of working capital (a) | (10,000.00) | ||
Outfloe in fixed assets (b) | (65,000.00) | ||
Release of working capital ( C ) | 10,000.00 | ||
Sales revenue | 70,000.00 | 70,000.00 | 70,000.00 |
Less: Operating cost | 25,000.00 | 25,000.00 | 25,000.00 |
Depreciation | 21,666.45 | 21,666.45 | 21,666.45 |
Profit before tax | 23,333.55 | 23,333.55 | 23,333.55 |
Tax @ 35% | 8,166.74 | 8,166.74 | 8,166.74 |
Profit after tax | 15,166.81 | 15,166.81 | 15,166.81 |
Inflow =(Profit after tax+depreciation) (d) | 36,833.26 | 36,833.26 | 36,833.26 |
Salvage proceeds received | 5,000.00 | ||
Tax on salvage proceeds @ 35% | 1,750.00 | ||
Net inflow from salvage proceed (e) | 3,250.00 | ||
Net inflow/(outflow),f = (a+b+c+d+e) | (38,166.74) | 36,833.26 | 50,083.26 |
Discounting factor @10% ,g | 0.91 | 0.83 | 0.75 |
Present value of net inflow/(outflow) (f*g) | (34,697.04) | 30,424.27 | 37,612.53 |
Therfore total Net present value | = -34,697.038+30,424.271+37,612.526 | ||
33,339.76 | |||
Financial Management Name: i. The Movie Place is considering a new investment whose data are shown below. The required equipment has a 3-year tax life and would be fully depreciated by the straight line method over the 3 years, but it would have a positive salvage value at the end of Year 3, when the project would be closed down Also, some new working capital would be required, but it would be recovered at the end of the projects life....
Thomson Media is considering some new equipment whose data are shown below. The equipment has a 3-year tax life and would be fully depreciated by the straight-line method over 3 years, but it would have a positive pre-tax salvage value at the end of Year 3, when the project would be closed down. Also, additional net operating working capital would be required, but it would be recovered at the end of the project's life. Revenues and other operating costs are...
Garden-Grow Products is considering a new investment whose data are shown below. The equipment would be depreciated on a straight-line basis over the project's 3-year life, would have a zero salvage value, and would require some additional working capital that would be recovered at the end of the projects to Revenues and other operating costs are expected to be constant over the project's life. What is the project's NPV? (Hint: Cash flows are constant in Years 1 to 3) WACC...
Garden-Grow Products is considering a new investment whose data are shown below. The equipment would be depreciated on a straight-line basis over the project's 3-year life, would have a zero salvage value, and would require some additional working capital that would be recovered at the end of the project's life. Revenues and other operating costs are expected to be constant over the project's life. What is the project's NPV? (Hint: Cash flows are constant in Years 1 to 3.) Project...
Manchester Films Manchester Films is considering some new equipment whose data are shown below. The equipment has a 3-year tax life and would be fully depreciated by the straight-line method over 3 years, but it would have a positive pre-tax salvage value at the end of Year 3, when the project would be closed down. Also, some new working capital would be required, but it would be recovered at the end of the project's life. Revenues and other operating costs...
Manchester Films Manchester Films is considering some new equipment whose data are shown below. The equipment has a 3-year tax life and would be fully depreciated by the straight-line method over 3 years, but it would have a positive pre-tax salvage value at the end of Year 3, when the project would be closed down. Also, some new working capital would be required, but it would be recovered at the end of the project's life. Revenues and other operating costs...
Please do not use Excel to solve this problem, using financial calculator and show steps. 5. CAD Corporation is considering some new equipment whose data are shown below. The equipment has a 3-year tax life and would be fully depreciated by the straight-line method over 3 years, but it would have a positive pre-tax salvage value at the end of Year 3, when the project would be closed down. Also, additional inventories would be required, but it would be recovered...
what is the project's NPV 8. Newington Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. r: 8.50 %...
Large Manufacturing, Inc. is considering investing in some new equipment whose data are shown below. The equipment has a 3-year class life and will be depreciated by the MACRS depreciation system, and it will have a positive pre-tax salvage value at the end of Year 3, when the project will be closed down. Also, some new working capital will be required, but it will be recovered at the end of the project's life. Revenues and cash operating costs are expected...
Large Manufacturing, Inc. is considering investing in some new equipment whose data are shown below. The equipment has a 3-year class life and will be depreciated by the MACRS depreciation system, and it will have a positive pre-tax salvage value at the end of Year 3, when the project will be closed down. Also, some new working capital will be required, but it will be recovered at the end of the project's life. Revenues and cash operating costs are expected...