Question

In: Finance

ABC, Inc is planning the purchase of new equipment that costs $149,331. The project is expected...

ABC, Inc is planning the purchase of new equipment that costs $149,331. The project is expected to last for 14 years. Each year, the new project is expected to sell 103 units for $480 per unit. The variable costs are expected to $50 per unit and the fixed costs are expected to be $23,038. The equipment will be depreciated on a straight-line basis over the 14-year life of the project. That is, the depreciation each year will be $149,331/14. Assuming a tax rate of 23%, what is the operating cash flow?

NEED EXCEL formula too

Solutions

Expert Solution

Hi dear, I have calculated OCF in 2methods side by side with the excel formula and explanation on depreciation has also been attached. You can refer any method which onle you like. You need to take a look on depreciation matter only that is bit complex and else everything is ok. please have a look and if you really like the answer you can appreciate me by giving a like. please do not forget to like. thank you

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

ABC, Inc is planning the purchase of new equipment that costs $149,331. The project is expected...
ABC, Inc is planning the purchase of new equipment that costs $149,331. The project is expected to last for 14 years. Each year, the new project is expected to sell 103 units for $480 per unit. The variable costs are expected to $50 per unit and the fixed costs are expected to be $23,038. The equipment will be depreciated on a straight-line basis over the 14-year life of the project. That is, the depreciation each year will be $149,331/14. Assuming...
ABC, Inc., is considering purchase of a new equipment. The expected sales are expected to be...
ABC, Inc., is considering purchase of a new equipment. The expected sales are expected to be $5,129,153. The annual cash operating expenses are expected to be $3,759,421. The annual depreciation is estimated to be $406,529 and the interest expense is estimated to be $179,173. If the tax rate is 27%, what is the operating cash flow?
Equipment: The project involves the purchase of a new machine. The machine costs $500,000 is depreciable...
Equipment: The project involves the purchase of a new machine. The machine costs $500,000 is depreciable over 5 years. The machine requires a new building which would cost another $250,000 (we assume that the construction of the building takes place at t=0). The building is also depreciable over 5 years. The building will occupy a field bought 2 years ago for $200,000. The best other use for the field is as a parking lot for employees. The post-tax present value...
ABC Inc. is planning to issue bonds to finance a new project. It offers $1,000 par...
ABC Inc. is planning to issue bonds to finance a new project. It offers $1,000 par       5-year, 7% semi-annual coupon payment bond. The bond is currently trading at         $1,150. The firm’s current costs of preferred equity and common equity are 4%         and 5.5% respectively and marginal tax rate is 34%. The firm’s project cost is         closest to: A. 2.43%. B. 3.98%. C. 11.93%.       D. 8.88%
Your company, Bearcat Inc., is planning to purchase new equipment with a price of $1,165,000. Bearcat...
Your company, Bearcat Inc., is planning to purchase new equipment with a price of $1,165,000. Bearcat Inc. is working out the financing plan with the manufacturer, and is considering the choice to finance for 36, 48, or 60 months at an annual interest rate of 5.124%. But you want to pay off the loan as quickly as possible. Bearcat Inc. has other projects in the company that require cash flow, therefore, you have some constraints that have to be considered...
VYS Inc will purchase a new machine that costs $30,000 and is expected to last 12...
VYS Inc will purchase a new machine that costs $30,000 and is expected to last 12 years with a salvage value of $3,000. Annual operating expenses for first year is $9,000 and increase by $200 each year thereafter. Annual income is expected to be $12,000 per year. If VYS’s MARR is 10%, determine the NFW of the machine purchase.
A company is considering purchasing new equipment. The purchase of the equipment is       expected to...
A company is considering purchasing new equipment. The purchase of the equipment is       expected to generate after tax savings of $12,600 each year for 8 years. The company can       borrow money at 6%. Assume annual compounding.         Determine the present value of the future cash inflows. Hint: the $12,600 are your annuity payments
24) With a purchase of new equipment for $400,000, ABC Inc. can lower its annual operating...
24) With a purchase of new equipment for $400,000, ABC Inc. can lower its annual operating costs by $150,000. The equipment will be depreciated straight-line to a zero book value over the project’s life of 3years. At the end of the three years, the equipment will be sold for $30,000. The new equipment will require additional spare parts inventory of $15,000 over the 3year period. What is the NPV if the discount rate is 15 percent and the tax rate...
ABC Ltd is negotiating for the purchase of a new piece of equipment for their current...
ABC Ltd is negotiating for the purchase of a new piece of equipment for their current operations. The new equipment would replace existing equipment that was purchased 5 years ago for $50,000 and is being depreciated to zero on a straight-line basis over its effective life of 10 years. The old equipment has a current scrap value of $16,000 and it would be $1,000 in 5 years’ time. The supplier has quoted a selling price of $60,000 for the new...
ABC Company is considering a new project. The project is expected to generate annual sales of...
ABC Company is considering a new project. The project is expected to generate annual sales of $65476, variable costs of $18689, and fixed costs of $9650. The depreciation expense each year is $10884 and the tax rate is 25 percent. What is the annual operating cash flow
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT