It costs $70,000 to buy a food truck, which will produce the following incremental after-tax cash...

It costs $70,000 to buy a food truck, which will produce the following incremental after-tax cash inflows: Year 1, $19,000; Year 2, $21,000; Year 3, $22,000; Year 4, $23,000. What is the payback period?

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jeff jeffy answered 2 years ago

It costs $53,000 to buy a food truck, which will produce the following incremental after-tax cash...

It costs $53,000 to buy a food truck, which will produce the following incremental after-tax cash inflows: Year 1, $25,000; Year 2, $20,000; Year 3, $20,000; Year 4, $25,000. Your discount rate is 10%. What is the discounted payback period? A. 1.8 years B. 2.4 years C. 2.9 years D. 3.6 years

Which of the following is considered an incremental cash flow? a. All costs associated with the...

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Worldwide trousers is considering an expansion of their existing business. The incremental after-tax cash flows to the project are: Year 0: $-25,500 Year 1: $5,500 Year 2: $7,500 Year 3: $8,500 Year 4: $10,000 The unlettered cost of equity is 10%. The corporate tax rate is 40%. A. Calculate the NPV of the project if it is all equity financed. B. Worldwide plans to issue a 4-year loan for $12,000 at an interest rate of 8% to partially finance the...

Which of the following cash flows is NOT an incremental cash flow associated with a project...

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Laura wants to buy a delivery truck. The truck costs $114,000 , and will allow her...

Laura wants to buy a delivery truck. The truck costs $114,000 , and will allow her to increase her after tax profits by $17,000 per year for the next 10 years. She will borrow 99% of the cost of the truck for 10 years, at an interest rate of 6%. Laura’s unlevered cost of capital is 15% and her tax rate is 22%. The loan includes a $2,000 application fee. What is the NPV of buying the truck on these...

Laura wants to buy a delivery truck. The truck costs $132,000 , and will allow her...

Laura wants to buy a delivery truck. The truck costs $132,000 , and will allow her to increase her after tax profits by $24,000 per year for the next 10 years. She will borrow 80% of the cost of the truck for 10 years, at an interest rate of 6%. Laura’s unlevered cost of capital is 17% and her tax rate is 34%. The loan includes a $1,000 application fee. What is the NPV of buying the truck on these...

Last year, you and two friends from college purchased a food truck for $70,000 hoping to...

Last year, you and two friends from college purchased a food truck for $70,000 hoping to make it big selling breakfast tacos. Your tacos were a big hit, and an investor made an offer to buy your business (truck, name, and all equipment) for $100,000 today (2020). Over the next 5 years, you project annual revenue to be $50,000 with operating costs of $10,000. Escalation of revenue and operating costs are expected to be a washout. The MACRS depreciation class...

A project will cost $50,000 today and produce equal after tax cash flows for the next...

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A project requires an initial investment of $300,000 and expects to produce an after-tax operating cash...

A project requires an initial investment of $300,000 and expects to produce an after-tax operating cash flow of $150,000 per year for three years. The asset value will be depreciated using straight-line depreciation over three years.At the end of the project, the asset could be sold for a price of $100,000. Assume a 21% tax rate and 15% cost of capital. Calculate the NPV of the project.

Which of the following is not considered a relevant concern in determining incremental cash flows for...

Which of the following is not considered a relevant concern in determining incremental cash flows for a new product? [CH-10] a. The final disposal of a product, including any tax effects related to the sale of the product. b. Revenues from the existing product that would be lost as a result of some customers switching to the new product. c. Shipping and installation costs associated with preparing the machine to be used to produce the new product. d. The cost...

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