Question
In: Finance
A company is considering expanding its facilities. This would create an increase in after-tax net cash...
A company is considering expanding its facilities. This would create an increase in after-tax net cash flow of $115,000 annually for 12 years. The expansion would require a capital investment (an initial outlay) of $480,000 today, and another $230,000 one year from now. If the appropriate cost of capital is 13%, what is the Net Present Value (NPV) of this project?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Why would After Tax Cash Flow increase for a couple filing jointly after they sell there...
Why would After Tax Cash Flow increase for a couple filing
jointly after they sell there home but Effective Tax Rate
decrease?
Question 2 Which of these would increase in the net cash flow to the company? a)...
Question 2
Which of these would increase in the net cash flow to the
company?
a)
Increasing inventory by $100,000
b)
Selling bonds
c)
Decreasing sales
d)
None of the above would increase the net cash flow
Question 6
Agency theory is of most concern in what type of business
structure?
a)
Sole proprietorship
b)
Partnership
c)
Corporation
d)
In all three equally
Question 8
Calculated free cash flow considers each of...
Determine the net present value for a project that costs $229,000 and would yield after-tax cash...
Determine the net present value for a project that costs
$229,000 and would yield after-tax cash flows of $21,000 per year
for the first 14 years, $29,000 per year for the next 18 years, and
$42,000 per year for the following 12 years. Your firm's cost of
capital is 10.00%.
Question 16 options:
$2,488.65
$1,345.00
$1,588.16
$1,885.34
$2,714.89
After-Tax Profit Targets Olivian Company wants to earn $300,000 in net (after-tax) income next year. Its...
After-Tax Profit Targets
Olivian Company wants to earn $300,000 in net (after-tax) income
next year. Its product is priced at $400 per unit. Product costs
include:
Direct materials
$120.00
Direct labor
$88.00
Variable overhead
$20.00
Total fixed factory overhead
$450,000
Variable selling expense is $16 per unit; fixed selling and
administrative expense totals $300,000. Olivian has a tax rate of
40 percent.
Required:
1. Calculate the before-tax profit needed to
achieve an after-tax target of $300,000.
$
2. Calculate the...
After-Tax Profit Targets Olivian Company wants to earn $300,000 in net (after-tax) income next year. Its...
After-Tax Profit
Targets Olivian Company wants to earn $300,000 in net
(after-tax) income next year. Its product is priced at $250 per
unit.
Product costs include:
Direct materials $75.00
Direct labor $55.00
Variable overhead $12.50
Total fixed factory overhead $445,000
Variable selling expense is $10 per unit; fixed selling and
administrative expense totals $295,000. Olivian has a tax rate of
40 percent.
Required: 1. Calculate the before-tax profit needed to achieve
an after-tax target of $300,000. $
2. Calculate the...
After-Tax Profit Targets Olivian Company wants to earn $360,000 in net (after-tax) income next year. Its...
After-Tax Profit Targets
Olivian Company wants to earn $360,000 in net (after-tax) income
next year. Its product is priced at $350 per unit. Product costs
include:
Direct materials
$105.00
Direct labor
$77.00
Variable overhead
$17.50
Total fixed factory overhead
$410,000
Variable selling expense is $14 per unit; fixed selling and
administrative expense totals $260,000. Olivian has a tax rate of
40 percent.
Required:
1. Calculate the before-tax profit needed to
achieve an after-tax target of $360,000.
$
2. Calculate the...
After-Tax Profit Targets Olivian Company wants to earn $420,000 in net (after-tax) income next year. Its...
After-Tax Profit Targets Olivian Company wants to earn $420,000
in net (after-tax) income next year. Its product is priced at $275
per unit. Product costs include: Direct materials $90 Direct labor
$65 Variable overhead $16 Total fixed factory overhead $440,000
Variable selling expense is $14 per unit; fixed selling and
administrative expense totals $290,000. Olivian has a tax rate of
40 percent. Required:
1. Calculate the before-tax profit needed to achieve an
after-tax target of $420,000.
2. Calculate the number...
Lotus Company is considering an investment project that is expected to generate after tax cash flows...
Lotus Company is considering an investment project that is
expected to generate after tax cash flows $500 for the first year,
$500 for the second year, $800 for the third year, and $800 for the
fourth year. The initial investment is $1400. The firm has a cost
of capital of 15%. (Keep your answer to only two decimals) a. What
is the payback period for the investment ? (example of answer
format: 15.42 years, or 15.42) b. What is the...
Your division is considering two projects. Its WACC is 10%, and the projects’ after-tax cash flows...
Your division is considering two projects. Its WACC is 10%, and
the projects’ after-tax cash flows (in millions of dollars) would
be as follows:
Time
0
1
2
3
4
Project A
-$30
$5
$10
$15
$20
Project B
-$30
$20
$10
$8
$6
e) The crossover rate is 13.5252%. Explain what this rate is and
how it affects the choice between mutually exclusive projects.
f) Define the MIRR. What’s the difference between the IRR and
the MIRR, and which...
Your division is considering two projects. Its WACC is 10%, and the projects’ after-tax cash flows...
Your division is considering two projects. Its WACC is 10%, and
the projects’ after-tax cash flows (in millions of dollars) would
be as follows:
Time
0
1
2
3
4
Project A
-$30
$5
$10
$15
$20
Project B
-$30
$20
$10
$8
$6
a) Calculate the projects’ NPVs, IRRs, MIRRs, regular paybacks,
and discounted paybacks.
b) If the two projects are independent, which project(s) should
be chosen?
c) If the two projects are mutually exclusive and the WACC is...
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