Question

In: Finance

The Wet Corp. has an investment project that will reduce expenses by $20,000 per year for...

The Wet Corp. has an investment project that will reduce expenses by $20,000 per year for 3 years. The project's cost is $20,000. If the asset is part of the 3-year MACRS category (33.33% first year depreciation) and the company's tax rate is 36%, what is the cash flow from the project in year 1?

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

The Wet Corp. has an investment project that will reduce expenses by $30,000 per year for...
The Wet Corp. has an investment project that will reduce expenses by $30,000 per year for 3 years. The project's cost is $35,000. If the asset is part of the 3-year MACRS category (33.33% first year depreciation) and the company's tax rate is 33%, what is the cash flow from the project in year 1? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.) $23,950 $23,400 $24,730 $25,410
Washington Corp. (WC) has the capacity to produce 20,000 fax machines per year. WC currently produces...
Washington Corp. (WC) has the capacity to produce 20,000 fax machines per year. WC currently produces and sells 14,000 units per year. The fax machines normally sell for $200 each. Modem Products has offered to buy 4,000 fax machines from WC for $100 each. Unit-level costs associated with manufacturing the fax machines are $50 each for direct labor, $30 each for unit direct materials, and $10 each for unit variable overhead cost. Allocated product-level cost are $12 each and allocated...
A project requires an investment of $20,000 and will return $26,500 after one year. Suppose the...
A project requires an investment of $20,000 and will return $26,500 after one year. Suppose the 10-year Treasury bill rate is 5%, and the project has a risk premium of 12%. A) Should this project be taken? Also Calculate the IRR of this project. B)If the manager wants to finance the project solely with equity, what is the equity holder’s valuation of this project? C)If the manager wants to finance the project 50% with equity and 50% with 10-year T-bill,...
A project requires an investment of $20,000 and will return $26,500 after one year. Suppose the...
A project requires an investment of $20,000 and will return $26,500 after one year. Suppose the 10-year Treasury bill rate is 5%, and the project has a risk premium of 12%. A) Should this project be taken? Also Calculate the IRR of this project. B)If the manager wants to finance the project solely with equity, what is the equity holder’s valuation of this project? C)If the manager wants to finance the project 50% with equity and 50% with 10-year T-bill,...
Consider a capital expenditure project that has forecasted revenues equal to $80,000 per year; cash expenses...
Consider a capital expenditure project that has forecasted revenues equal to $80,000 per year; cash expenses are estimated to be $25,000 per year. The cost of the project equipment is $120,000, and the equipment’s estimated salvage value at the end of the project is $10,000. The equipment’s $120,000 cost will be depreciated on a straight-line basis to $0 over an 8-year estimated economic life. Assume that the project requires an initial $10,000 working capital investment. The company can recover this...
Consider a capital expenditure project that has forecasted revenues equal to $80,000 per year; cash expenses...
Consider a capital expenditure project that has forecasted revenues equal to $80,000 per year; cash expenses are estimated to be $25,000 per year. The cost of the project equipment is $120,000, and the equipment’s estimated salvage value at the end of the project is $10,000. The equipment’s $120,000 cost will be depreciated on a straight-line basis to $0 over an 8-year estimated economic life. Assume that the project requires an initial $10,000 working capital investment. The company can recover this...
caclulate the NPV for the project that has an initial investment of $20,000 with expected after-tax...
caclulate the NPV for the project that has an initial investment of $20,000 with expected after-tax operating cash flows of $125,000 per year for each of the next 3 years. However, in preparation for its termination at the end of year 3, an additional investment of $350,000 must be made at the end of Year 2. What is the NPV? the cost of capital is 12%. Please show all calculations in excel!
Consider the following two investment projects: Project A: it has an initial cost of 20,000 euros...
Consider the following two investment projects: Project A: it has an initial cost of 20,000 euros and requires additional investments of 5,000 euros at the end of the first year and 15,000 euros at the end of the second. This project is two years old and generates 20,000 euros per year in income. Project B: it has an initial cost of 20,000 euros and requires an additional investment of 10,000 euros at the end of the first year. This project...
If an investment requiring a $20,000 initial investment is forecasted to produce income of $3,000 per...
If an investment requiring a $20,000 initial investment is forecasted to produce income of $3,000 per year for five years and will be sold at the end of year 5 for $20,000, what is its projected IRR?
Suppose Michael has a rental income of $20,000 per year and has a job that pays...
Suppose Michael has a rental income of $20,000 per year and has a job that pays $50,000. Michael has no other income sources. With a 20% probability, Michael would lose his job and has an income of 0. Suppose an unemployment insurance policy is available. With the unemployment insurance, the insurer pays $10,000 in the case of unemployment. The premium of the unemployment insurance is $2,500. Michael has a utility function that exhibits diminishing marginal return of consumption. Which is...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT