Question

In: Finance

A project will produce an operating cash flow of $7,300 a year for three years. The...

A project will produce an operating cash flow of $7,300 a year for three years. The initial investment for fixed assets will be $11,600, which will be depreciated straight-line to zero over the asset's 4-year life. Ignore bonus depreciation. The project will require an initial $500 in net working capital plus an additional $500 every year with all net working capital levels restored to their original levels when the project ends. The fixed assets can be sold for an estimated $2,500 at the end of the project, the combined tax rate is 23 percent, and the required rate of return is 12 percent. What is the net present value of the project?

$7,500.95

$9,896.87

$7,072.72

$6,353.41

$8,398.29

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 1 month ago
Next > < Previous

Related Solutions

A project will produce an operating cash flow of $91,500 a year for three years. The...
A project will produce an operating cash flow of $91,500 a year for three years. The initial cash outlay for equipment will be $188,000. The net aftertax salvage value of $17,000 will be received at the end of the project. The project requires $52,000 of net working capital up front that will be fully recovered. What is the net present value of the project if the required rate of return is 14 percent? A. $22,318.76 B. $19,002.37 C. $15,450.93 D....
A project will produce an operating cash flow of $15,200 a year for four years. The...
A project will produce an operating cash flow of $15,200 a year for four years. The initial cash investment in the project will be $50,000. The net after-tax salvage value is estimated at $4,000 and will be received during the last year of the project’s life. What is the internal rate of return for this project? Should the project be accepted if the cost of capital is 10%? Group of answer choices 8.31%; No, project should be rejected 10.81%; Yes,...
A project will produce an operating cash flow of $295,000 a year for four years. The...
A project will produce an operating cash flow of $295,000 a year for four years. The initial cash outlay for equipment will be $721,000. The net aftertax salvage value of $72,000 will be received at the end of the project. The project requires $79,000 of net working capital that will be fully recovered when the project ends. What is the net present value of the project if the required rate of return is 15 percent? $114,372 $121,017 $128,553 $136,764 $144,915
A project will produce an operating cash flow of $445,000 a year for four years. The...
A project will produce an operating cash flow of $445,000 a year for four years. The initial cash outlay for equipment will be $1,195,000. The net aftertax salvage value of $61,000 will be received at the end of the project. The project requires 87,000 of net working capital up front that will be fully recovered. What is the net present value of the project if the required rate of return is 12 percent? $146,800.23 $181,219.28 $154,036.37 $172,811.69 $163,677.13
A project will produce an operating cash flow of $445,000 a year for four years. The...
A project will produce an operating cash flow of $445,000 a year for four years. The initial cash outlay for equipment will be $1,195,000. The net aftertax salvage value of $61,000 will be received at the end of the project. The project requires 87,000 of net working capital up front that will be fully recovered. What is the net present value of the project if the required rate of return is 12 percent? $146,800.23 $181,219.28 $154,036.37 $172,811.69 $163,677.13
Dorel Industries is considering an investment project that will produce an operating cash flow of $407,000...
Dorel Industries is considering an investment project that will produce an operating cash flow of $407,000 a year for five years. The initial cash outlay for equipment will be $1,318,000. An aftertax salvage value of $105,440 for the equipment will be received at the end of the project. The project requires $197,000 of net working capital that will be fully recovered. What is the net present value of the project if the required rate of return is 14 percent? $98,043.66...
USP Company is considering an investment project that will produce an operating cash flow of $94,000...
USP Company is considering an investment project that will produce an operating cash flow of $94,000 a year for three years. The initial cash outlay for equipment will be $201,000. The net aftertax salvage value of $17,000 will be received at the end of the project. The project requires $32,500 of net working capital up front that will be fully recovered when the project ends. What is the net present value of the project if the required rate of return...
operating cash flow. find the operating cash flow for the year for robinson and sons if...
operating cash flow. find the operating cash flow for the year for robinson and sons if it had sales of $81,200,000,,, cost of goods of $35,500,000, sales and administrative costs of $6,200,000, depreciation expense of $7,000,000, and a tax rate 0f 30%. the operating cash flow is ....... (round to the nearest dollar)
A project will produce cash inflows of $1,750 a year for four years. The project initially...
A project will produce cash inflows of $1,750 a year for four years. The project initially costs $10,600 to get started. In year five, the project will be closed and as a result should produce a cash inflow of $8,500. What is the net present value of this project if the required rate of return is 14.75%?   -$1,306.18 -$935.56   $5,474.76   $1,011.40
Operating cash flow.??Find the operating cash flow for the year for Harper? Brothers, Inc. if it...
Operating cash flow.??Find the operating cash flow for the year for Harper? Brothers, Inc. if it had sales revenue of $308,600,000?, cost of goods sold of $135,600,000?, sales and administrative costs of $39,300,000?, depreciation expense of $65,700,000?, and a tax rate of 40%.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT