When conducting a capital budgeting analysis, the changes in net working capital through time are usually assumed to be...
When conducting a capital budgeting analysis, the changes in net working capital through time are usually assumed to be caught back up in the last period (terminal cash flow) on an after-tax basis
Group of answer choices
True
False
Homework Answers
True.
As working capital invested or utilised for a capital budgeting project will be recovered normally at the end of the capital project.
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When conducting a capital budgeting analysis, the changes in net working capital through time are usually assumed to be...
You just finished a capital budgeting investment analysis on a $198 million project. The project's life...
You just finished a capital budgeting investment analysis on a $198 million project. The project's life is 12 years and it will generate equal annual after-tax cash operating cash flows of $33.05 million. You assumed a $55 million salvage value, but the projecť's adjusted tax basis at termination will be $66 million. The project would have no effect on net working capital. With a 22% marginal tax rate, the resulting NPV is $41.628 million. What cost of capital did you...
Which of the following is not relevant in a capital budgeting analysis because it is not...
Which of the following is not relevant in a capital budgeting analysis because it is not an incremental cash flow? a. Externalities b. Shipping and installation costs associated with the purchase of a capital budgeting project c. Changes in the firm's net working capital d. Salvage value of a capital budgeting project e. Purchase price of a capital budgeting project
When discounted cash flow methods of capital budgeting are used, the working capital required for a...
When discounted cash flow methods of capital budgeting are used, the working capital required for a project is ordinarily counted as a cash inflow at the beginning of the project and as a cash outflow at the end of the project. True or False
When conducting a capital budgeting analysis and attempting to account for effects of exchange rate movements...
When conducting a capital budgeting analysis and attempting to account for effects of exchange rate movements for a foreign project, inflation _______ included explicitly in the cash flow analysis, and debt payments by the subsidiary _______ included explicitly in the cash flow analysis. should be; should be should definitely not be; should definitely not be should definitely not be; should be should be; should definitely not be
Which of the following is correct? A. Capital budgeting analysis for expansion and replacement projects is...
Which of the following is correct? A. Capital budgeting analysis for expansion and replacement projects is esentially the same because the types of cash flows involved are the same. B. The replacement decision involves analysis of two independent projects where the relevant cash flows include the initial investment, additiona depreciation, and the terminal value. C. The change in working capital for a project is the difference between the required increase in current assets and the spontaneous increase in current liabilities...
4- When calculating the after-tax operating cash flows in capital budgeting analysis, which of the following are reflect...
4- When calculating the after-tax operating cash flows in capital budgeting analysis, which of the following are reflected? Group of answer choices additional (incremental) expenses all of the above additional (incremental) revenue additional (incremental) costs additional (incremental) depreciation
When evaluating Capital Budgeting decisions, which of the following items should NOT be included in the...
When evaluating Capital Budgeting decisions, which of the following items should NOT be included in the construction of cash flow projections for purposes of analysis? Net salvage value Changes in net working capital requirements Shipping and installation costs All of the above should be included
Q#2 Impact of 2017 Tax Cut Act on Net Income, Cash Flows and 8 Capital Budgeting...
Q#2 Impact of 2017 Tax Cut Act on Net Income, Cash Flows and 8 Capital Budgeting (Investment) De cisions 59 (a) Estimate NPV, IRR and Payback Period of the project if equipment is fully 60 depreciated in first year and tax rate equals to 21 %. Would you 61 accept or reject the project? 62 (b) As a CFO of the firm, which of the above two scenario (a) or (b) 63 would you choose? Why? FINC 3310-Fall 2019 Learning...
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net...
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: The project's financing costs The project's depreciation expense Changes in net working capital associated with the project The project's fixed-asset expenditures O Indirect cash flows often affect a firm's capital budgeting decisions. However, some of these indirect cash flows are...
Alice Werd is a new project analyst; he is working on capital budgeting analysis of two...
Alice Werd is a new project analyst; he is working on capital budgeting analysis of two mutually exclusive projects. The followings are the cash flow forecasts for both the projects years Project A Expected Cash flows Project B Expected Cash flows 0 (1000,000) ($900,000) 1 50000 650,000 2 200,000 650,000 3 600,000 550,000 4 1000,000 300,000 5 1500,000 100,000 The following metrics presents the key information based on capital budgeting indicators. For purposes of analysis, he plans to use a...
You just finished a capital budgeting investment analysis on a $198 million project. The project's life is 12 years and it will generate equal annual after-tax cash operating cash flows of $33.05 million. You assumed a $55 million salvage value, but the projecť's adjusted tax basis at termination will be $66 million. The project would have no effect on net working capital. With a 22% marginal tax rate, the resulting NPV is $41.628 million. What cost of capital did you...
Q#2 Impact of 2017 Tax Cut Act on Net Income, Cash Flows and 8 Capital Budgeting (Investment) De cisions 59 (a) Estimate NPV, IRR and Payback Period of the project if equipment is fully 60 depreciated in first year and tax rate equals to 21 %. Would you 61 accept or reject the project? 62 (b) As a CFO of the firm, which of the above two scenario (a) or (b) 63 would you choose? Why? FINC 3310-Fall 2019 Learning...
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: The project's financing costs The project's depreciation expense Changes in net working capital associated with the project The project's fixed-asset expenditures O Indirect cash flows often affect a firm's capital budgeting decisions. However, some of these indirect cash flows are...
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