Question
In: Finance
Dog Up! Franks is looking at a new sausage system with an installed cost of $626,691....
Dog Up! Franks is looking at a new sausage system with an installed cost of $626,691. This cost will be depreciated straight-line to 56,970 over the project's 7-year life, at the end of which the sausage system can be scrapped for $88,788. The sausage system will save the firm $173,036 per year in pretax operating costs, and the system requires an initial investment in net working capital of $63,590. If the tax rate is 0.36 and the discount rate is 0.12, what is the total cash flow in year 7? (Make sure you enter the number with the appropriate +/- sign)
Solutions
Expert Solution
The Cash flow in year 7 would be $256,990
Explanation:
| Cash Inflow | 140,043 |
| Add: Working Capital | +63,590 |
| Profit on sale of Scrap | + 20,364 |
| Net cash flow in the year 7 | 223,996 |
| Scrap value of Sausage | 88,788 |
| less: Cost of Sausage | - 56,970 |
| Profit on sale of scrap | 31,818 |
| Less: Tax on sale of scrap | - 11,454 |
| Net profit on sale of scrap | 20,364 |
| Cost Saving | 173036 |
| Less: Depreciation | -81389 |
| Profit Before Tax | 91647 |
| Less: Tax | -32993 |
| Profit After Tax | 58654 |
| Add: Depreciation | +81389 |
| Cash Inflow | 140043 |
I hope this clear your doubt.
Do give Thumbs up if you find this helpful.
jeff jeffy answered 5 months agoRelated Solutions
A) Dog Up! Franks is looking at a new sausage system with an installed cost of...
A) Dog Up! Franks is looking at a new sausage system with an
installed cost of $506559. This cost will be depreciated
straight-line to zero over the project's five-year life, at the end
of which the sausage system can be scrapped for $73471. The sausage
system will save the firm $175487 per year in pretax operating
costs, and the system requires an initial investment in net working
capital of $30680. If the tax rate is 38 percent and the discount...
) Dog Up! Franks is looking at a new sausage system with an installed cost of...
) Dog Up! Franks is looking at a new sausage system with an
installed cost of $411,500. This cost will be depreciated
straight-line to zero over the project's seven-year life, at the
end of which the sausage system is expected to be sold for $35,000
cash. No bonus depreciation will be taken. The sausage system will
save the firm $129,400 per year in pretax operating costs, and the
system requires an initial investment in net working capital of
$22,500. All...
Dog Up! Franks is looking at a new sausage system with an installed cost of $900...
Dog Up! Franks is looking at a new sausage system with an
installed cost of $900 which will be fully depreciated
straight-line over the project's 3-year life and then scrapped for
$150. The system will save the firm $280/year in pretax operating
costs, and the system requires an initial investment in a constant
level of net working capital of $65. If the tax rate is 21% and the
discount rate is 9%, what should the firm do?
Dog Up! Franks is looking at a new sausage system with an installed cost of $733,200....
Dog Up! Franks is looking at a new sausage system with an
installed cost of $733,200. This cost will be depreciated
straight-line to zero over the project's 10-year life, at the end
of which the sausage system can be scrapped for $112,800. The
sausage system will save the firm $225,600 per year in pretax
operating costs, and the system requires an initial investment in
net working capital of $52,640.
If the tax rate is 25 percent and the discount...
Dog Up! Franks is looking at a new sausage system with an installed cost of $343,200....
Dog Up! Franks is looking at a new sausage system with an
installed cost of $343,200. This cost will be depreciated
straight-line to zero over the project's 4-year life, at the end of
which the sausage system can be scrapped for $52,800. The sausage
system will save the firm $105,600 per year in pretax operating
costs, and the system requires an initial investment in net working
capital of $24,640.
If the tax rate is 24 percent and the discount...
Dog Up! Franks is looking at a new sausage system with an installed cost of $343,200....
Dog Up! Franks is looking at a new sausage system with an
installed cost of $343,200. This cost will be depreciated
straight-line to zero over the project's 7-year life, at the end of
which the sausage system can be scrapped for $52,800. The sausage
system will save the firm $105,600 per year in pretax operating
costs, and the system requires an initial investment in net working
capital of $24,640. If the tax rate is 21 percent and the discount
rate...
Dog Up! Franks is looking at a new sausage system with an installed cost of $897,000....
Dog Up! Franks is looking at a new sausage system with an
installed cost of $897,000. This cost will be depreciated
straight-line to zero over the project's 4-year life, at the end of
which the sausage system can be scrapped for $138,000. The sausage
system will save the firm $276,000 per year in pretax operating
costs, and the system requires an initial investment in net working
capital of $64,400. If the tax rate is 23 percent and the discount
rate...
Dog Up! Franks is looking at a new sausage system with an installed cost of $312,000....
Dog Up! Franks is looking at a new sausage system with an
installed cost of $312,000. This cost will be depreciated
straight-line to zero over the project's 8-year life, at the end of
which the sausage system can be scrapped for $48,000. The sausage
system will save the firm $96,000 per year in pretax operating
costs, and the system requires an initial investment in net working
capital of $22,400. Required: If the tax rate is 33 percent and the
discount...
Dog Up! Franks is looking at a new sausage system with an installed cost of $504,253....
Dog Up! Franks is looking at a new sausage system with an
installed cost of $504,253. This cost will be depreciated
straight-line to zero over the project's five-year life, at the end
of which the sausage system can be scrapped for $77,475. The
sausage system will save the firm $174,403 per year in pretax
operating costs, and the system requires an initial investment in
net working capital of $35,998. If the tax rate is 36 percent and
the discount rate...
Dog Up! Franks is looking at a new sausage system with an installed cost of $920,400....
Dog Up! Franks is looking at a new sausage system with an
installed cost of $920,400. This cost will be depreciated
straight-line to zero over the project's 6-year life, at the end of
which the sausage system can be scrapped for $141,600. The sausage
system will save the firm $283,200 per year in pretax operating
costs, and the system requires an initial investment in net working
capital of $66,080. Required: If the tax rate is 31 percent and the
discount...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- consider a firm’s desire to invest in its capital stock and answer the following questions: A)...
- In 2009, Nobel-prize winning economist Paul Krugman wrote, “The paradox of thrift is one of those...
- One electrode compartment consists of an aluminum strip placed in a solution of Al(NO3)3, and the...
- Problem #5: A loan of $44,000 is paid off in 36 payments at the end of...
- How many grams of Na2CO3 should be mixed with 5.00 g of NaHCO3 to produce 100...
- Given the following information for a monopolistic competitor: Demand: P = 78 – 5(Q) Marginal revenue:...
- Why does the auto industry prefer uniform (national) standards for automobile emissions as opposed to regionally...
ADVERTISEMENT