Homework Answers
OPTION: Incremental after tax cash flows
EXPLANATION:
Incremental after tax cash flows are the indicator of whether a company is profitable or not. If the cash flows are positive, the company is making profits and vice versa. Profitability is function of business value.
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POHLS) Javeu Business value comes directly from: a) Incremental after-tax cash flows Ob) Information sharing Oc)...
Which of the following best defines incremental earnings? O A. cash flows arising from a particular...
Which of the following best defines incremental earnings? O A. cash flows arising from a particular investment decision OB. the earnings arising from all projects that a company plans to undertake in a fixed time span OC. the net present value (NPV) of earnings that a firm is expected to receive as the result of an investment decision OD. the amount by which a firm's earnings are expected to change as a result of an investment decision
1) What is the incremental annual after-tax Cash Flow earned from owning leasing ? 2) Assuming...
1) What is the incremental annual after-tax Cash Flow
earned from owning leasing ?
2) Assuming at the end of year 10 the buyer of the building
determinate they could landlord, attract a new tenant, lease the
building and obtain the following NOI:
Rent
250,000
Operating Expenses
75,000
Real Estate taxes
40,000
NOI 135,000
What is the implied cap rate if the building is sold for
$2,250,000?
to decide if the new office leasing are estimated in the s will...
What are the major sources of economic profit? Oa. certainty, monopolistic competition, and inelastic supply. Ob. competition, perfect information, and elasticity of market demand. oc. barriers...
What are the major sources of economic profit? Oa. certainty, monopolistic competition, and inelastic supply. Ob. competition, perfect information, and elasticity of market demand. oc. barriers to entry, uncertainty, and entrepreneurial alertness. Od. externalities, inflation, and size of firm. The procedure used to calculate the present value of future income is called Oa. indirect production. O b. investment tax shelter planning. Oc. discounting. d. amortizing. If the interest rate is 5 percent, the net present value of $200 to be...
D l Question 1 When calculating incremental cash flows, we should include O interest O financing...
D l Question 1 When calculating incremental cash flows, we should include O interest O financing expenses Q sunk costs opportunity costs | Question 2 2 pts The cash flows that occur just because of a new project are called O marginal cash flows o project cash flos e additional cash flows O incremental cash flows 2 pts D | Question 3 Sun Corp. uses a discount rate of 6% for below-average risk projects, 8% for average-risk projects, and 10%...
When calculating a project's NPV, cash flows are discounted at: O A) the opportunity cost of...
When calculating a project's NPV, cash flows are discounted at: O A) the opportunity cost of capital. OB) the risk-free rate of return. OC) a discount rate of zero. D) the internal rate of return. 0 1 4 5 2 + 5,600 3 + + -18,000 5,600 5,600 5,600 5,600 A firm with a 14% WACC is evaluating one project for this year's capital budget. After-tax cash flows, including depreciation are attached. What is the regular payback for this project?...
The PARC Co. Inc. asked you to determine some of the after-tax cash flows (ATCF) for...
The PARC Co. Inc. asked you to determine some of the after-tax cash flows (ATCF) for equipment used for research and development that is being considered. PARC expects the equipment to require the purchase of $190,000 worth of capital equipment (first cost) and to operate for five years. The capital equipment will have a resale value of $55,000 at the end of the 5th year. PARC plans to use the sum-of-years’-digits depreciation method for income tax calculations. The income tax...
Use the following information to answer the next five questions: Consider the after-tax cash flows below...
Use the following information to answer the next five questions: Consider the after-tax cash flows below from a project that is being considered by Despondus Corporation. Since the project is an extension of the firm's current business, it carries the same risk as the overall firm. Year 0 1 2 3 4 5 Cash Flow -$269,000 $91,000 $66,000 $107,000 $92,000 $95,000 Despondus Corporation's common stock is currently priced at $128.13, and there are 585,000,000 shares outstanding. A dividend of $3.54...
Use the following information to answer the next five questions: Consider the after-tax cash flows below...
Use the following information to answer the next five questions: Consider the after-tax cash flows below from a project that is being considered by Despondus Corporation. Since the project is an extension of the firm's current business, it carries the same risk as the overall firm. 1 Year 0 1 2 3 4 5 Cash Flow $479,000 $103,000 $67,000 $107,000 $92,000 $102,000 Despondus Corporation's common stock is currently priced at $124.05, and there are 713,000,000 shares outstanding. A dividend of...
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
A dry-bean harvester requires an initial cash outlay of $350,000. The after-tax net cash flows from...
A dry-bean harvester requires an initial cash outlay of $350,000. The after-tax net cash flows from this harvester will be $80,000 during the first year: $50,000 for each of the second, third, and fourth years; and $45,000 for the fifth, sixth, seventh, and eight years. In year eight, the harvester can be sold for an after-tax salvage value of $150,000. What is payback period? 8 years 7 years 6 years 5 years 4 years 3 years 2 years 1 year
Which of the following best defines incremental earnings? O A. cash flows arising from a particular investment decision OB. the earnings arising from all projects that a company plans to undertake in a fixed time span OC. the net present value (NPV) of earnings that a firm is expected to receive as the result of an investment decision OD. the amount by which a firm's earnings are expected to change as a result of an investment decision
1) What is the incremental annual after-tax Cash Flow
earned from owning leasing ?
2) Assuming at the end of year 10 the buyer of the building
determinate they could landlord, attract a new tenant, lease the
building and obtain the following NOI:
Rent
250,000
Operating Expenses
75,000
Real Estate taxes
40,000
NOI 135,000
What is the implied cap rate if the building is sold for
$2,250,000?
to decide if the new office leasing are estimated in the s will...
What are the major sources of economic profit? Oa. certainty, monopolistic competition, and inelastic supply. Ob. competition, perfect information, and elasticity of market demand. oc. barriers to entry, uncertainty, and entrepreneurial alertness. Od. externalities, inflation, and size of firm. The procedure used to calculate the present value of future income is called Oa. indirect production. O b. investment tax shelter planning. Oc. discounting. d. amortizing. If the interest rate is 5 percent, the net present value of $200 to be...
D l Question 1 When calculating incremental cash flows, we should include O interest O financing expenses Q sunk costs opportunity costs | Question 2 2 pts The cash flows that occur just because of a new project are called O marginal cash flows o project cash flos e additional cash flows O incremental cash flows 2 pts D | Question 3 Sun Corp. uses a discount rate of 6% for below-average risk projects, 8% for average-risk projects, and 10%...
When calculating a project's NPV, cash flows are discounted at: O A) the opportunity cost of capital. OB) the risk-free rate of return. OC) a discount rate of zero. D) the internal rate of return. 0 1 4 5 2 + 5,600 3 + + -18,000 5,600 5,600 5,600 5,600 A firm with a 14% WACC is evaluating one project for this year's capital budget. After-tax cash flows, including depreciation are attached. What is the regular payback for this project?...
Use the following information to answer the next five questions: Consider the after-tax cash flows below from a project that is being considered by Despondus Corporation. Since the project is an extension of the firm's current business, it carries the same risk as the overall firm. 1 Year 0 1 2 3 4 5 Cash Flow $479,000 $103,000 $67,000 $107,000 $92,000 $102,000 Despondus Corporation's common stock is currently priced at $124.05, and there are 713,000,000 shares outstanding. A dividend of...
A dry-bean harvester requires an initial cash outlay of $350,000. The after-tax net cash flows from this harvester will be $80,000 during the first year: $50,000 for each of the second, third, and fourth years; and $45,000 for the fifth, sixth, seventh, and eight years. In year eight, the harvester can be sold for an after-tax salvage value of $150,000. What is payback period? 8 years 7 years 6 years 5 years 4 years 3 years 2 years 1 year
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