Question

Use the following information to answer the following q capital spendini to grow by 15% swer the fllowing question: The CPS Inc's EBIT in the current year is S13 000 You capital spending are $2,000, $5,000, and $4,000, respectively. Assumec 29. What comes closest to the current after-tax cashflow from assets 1 r the next 2 years and 2% thereafter. The depreciation, the change in NWC, and the te as EBIT. The current level of depreciation, change in NWC, and I spending are expected to grow at the same ra A. 2,100 B. 1,900 C. 6,000 D. 9,100 Use the following to an se uhe to lowing to answer the next three questions: Deepwater Ine, has developed a 9,year project that requires an $300,000 for 3 consecutive years immediate investment of $2.5 million. The project's annual long-term net cash flows are beginning in one year and 500,000 for the remaining period until the end of the project. Assume that t required rate of return of 12%. Assume that no other transactions exist to affect the project cash flows. 30. Based on these estimates, what comes closest to the project's NPV? A. -0.3 million B. 0.6 million C. 1.4 million D. 4.7 million 31. What comes closest to the project's IRR? A. Undefined B. 8.9% C. 10.5% D. 11.9%

Answer 1

Here to calculate FCFF, we need to add back all non cash items and subtract capital expenditure as FCFF by defination is cash flow that is left to shareholders (both debt and equity) after paying all operational expenses.

we can use som '6b1T-= 13,000 USD -13, ooD Uso Depre dahon2000 USD value 1 s pmulo OOD