You are required to use after-tax cash flows. Explain why this requirement is appropriate in decision...
You are required to use after-tax cash flows. Explain why this requirement is appropriate in decision making for capital budgeting decisions.
Homework Answers
after tax cash flows represents real cash inflows and outflows. They are the ones left to the company after paying debt holders and to the goverment, which can be used by stakeholders on their discretion and so they ensure the sufficient liquidity. Companies mostly focus on these after tax cash flows rather than profits when evaluating projects becuase cash flows directly influence valuation of a firm.
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You are required to use after-tax cash flows. Explain why this requirement is appropriate in decision...
why is it appropriate to use after-tax cash flows in decision making
why is it appropriate to use after-tax cash flows in decision making
Why you would make an investment if the value of the expected cash flows exceeds the...
Why you would make an investment if the value of the expected cash flows exceeds the cost of the project ?Why are capital budgeting decisions among the most important decisions in the life of a firm? Why profit maximization is not the best goal for a company. What is a better goal?
Assignment Capital Budgeting problem with After-tax Cash Flows Bell Manufacturing is considering purchasing a new labeling...
Assignment Capital Budgeting problem with After-tax Cash Flows Bell Manufacturing is considering purchasing a new labeling machine. The equipment will cost $180,000 and have a 5-year useful life. Expected salvage value is $20,000. Tax regulations permit the following depreciation schedule: Percent Deductible Year 1 20% 2 32 3 19 4 15 14 The company's tax rate is 30% and its cost of capital is 4%. The equipment is expected to generate the following cash savings and cash expenses: Cash Expenses...
Question 4 6 pts For each cash flow item, identify the required adjustment to get after-tax cash flows: Investment...
Question 4 6 pts For each cash flow item, identify the required adjustment to get after-tax cash flows: Investment cash outflow Choose Expense cash outflow Choose Working capital cash inflow Choose Revenue cash inflow Choose
Question 4 6 pts For each cash flow item, identify the required adjustment to get after-tax cash flows: Investment cash outflow Choose Expense cash outflow Choose Working capital cash inflow Choose Revenue cash inflow Choose
PLEASE USE SOMETHING THAT HAS NOT BEEN USED BEFORE you and your staff analyze the feasibility...
PLEASE USE SOMETHING THAT HAS NOT BEEN USED BEFORE you and your staff analyze the feasibility of acquiring this supplier. Discuss the following: What information is needed to analyze this investment opportunity? What will be your decision-making process? All future costs are relevant in decision making. Do you agree? Why? Capital budgeting decisions fall into 2 broad categories: screening decisions and preference decisions. Discuss this. Which do you think should use—screening decisions or preference decisions? Why? PLEASE USE DETAIL
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...
8. Conclusions about capital budgeting The decision process Before making capital budgeting decisions, finance professionals often...
8. Conclusions about capital budgeting The decision process Before making capital budgeting decisions, finance professionals often generate, review, analyze, select, and implement long-term investment proposals that meet firm-specific criteria and are consistent with the firm's strategic goals. Companies often use several methods to evaluate the project's cash flows and each of them has its benefits and disadvantages. Based on your understanding of the capital budgeting evaluation methods, which of the following conclusions about capital budgeting are valid? Check all that...
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...
Assignment Capital Budgeting problem with After-tax Cash Flows Bell Manufacturing is considering purchasing a new labeling...
Assignment Capital Budgeting problem with After-tax Cash Flows Bell Manufacturing is considering purchasing a new labeling machine. The equipment will cost $180,000 and have a 5-year useful life. Expected salvage value is $20,000. Tax regulations permit the following depreciation schedule: Percent Deductible Year 1 20% 2 32 3 19 4 15 14 The company's tax rate is 30% and its cost of capital is 4%. The equipment is expected to generate the following cash savings and cash expenses: Cash Expenses...
The decision process Before making capital budgeting decisions, finance professionals often generate, review, analyze, select, and...
The decision process Before making capital budgeting decisions, finance professionals often generate, review, analyze, select, and implement long-term investment proposals that meet firm-specific criteria and are consistent with the firm's strategic goals. Companies often use several methods to evaluate the project's cash flows and each of them has its benefits and disadvantages. Based on your understanding of the capital budgeting evaluation methods, which of the following conclusions about capital budgeting are valid? Check all that apply. For most firms, the...
Assignment Capital Budgeting problem with After-tax Cash Flows Bell Manufacturing is considering purchasing a new labeling machine. The equipment will cost $180,000 and have a 5-year useful life. Expected salvage value is $20,000. Tax regulations permit the following depreciation schedule: Percent Deductible Year 1 20% 2 32 3 19 4 15 14 The company's tax rate is 30% and its cost of capital is 4%. The equipment is expected to generate the following cash savings and cash expenses: Cash Expenses...
Question 4 6 pts For each cash flow item, identify the required adjustment to get after-tax cash flows: Investment cash outflow Choose Expense cash outflow Choose Working capital cash inflow Choose Revenue cash inflow Choose
Question 4 6 pts For each cash flow item, identify the required adjustment to get after-tax cash flows: Investment cash outflow Choose Expense cash outflow Choose Working capital cash inflow Choose Revenue cash inflow Choose
8. Conclusions about capital budgeting The decision process Before making capital budgeting decisions, finance professionals often generate, review, analyze, select, and implement long-term investment proposals that meet firm-specific criteria and are consistent with the firm's strategic goals. Companies often use several methods to evaluate the project's cash flows and each of them has its benefits and disadvantages. Based on your understanding of the capital budgeting evaluation methods, which of the following conclusions about capital budgeting are valid? Check all that...
Assignment Capital Budgeting problem with After-tax Cash Flows Bell Manufacturing is considering purchasing a new labeling machine. The equipment will cost $180,000 and have a 5-year useful life. Expected salvage value is $20,000. Tax regulations permit the following depreciation schedule: Percent Deductible Year 1 20% 2 32 3 19 4 15 14 The company's tax rate is 30% and its cost of capital is 4%. The equipment is expected to generate the following cash savings and cash expenses: Cash Expenses...
The decision process Before making capital budgeting decisions, finance professionals often generate, review, analyze, select, and implement long-term investment proposals that meet firm-specific criteria and are consistent with the firm's strategic goals. Companies often use several methods to evaluate the project's cash flows and each of them has its benefits and disadvantages. Based on your understanding of the capital budgeting evaluation methods, which of the following conclusions about capital budgeting are valid? Check all that apply. For most firms, the...
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