Question

In: Finance

A new project costs $28 million and has an expected life of 12 years. It will...

A new project costs $28 million and has an expected life of 12 years. It will be depreciated straight line over an 7 year term. EBDT per year for the project is $5.5 million and the firm's tax rate is 40%. Show the expected cashflows per year for this project over its life.

Solutions

Expert Solution


Related Solutions

A new project will cost $124 million and will have an expected life of 15 years....
A new project will cost $124 million and will have an expected life of 15 years. The project will be depreciated straight-line over a 9-year term. EBDT for the project is expected to be $16 million per year. The firm's tax rate is 25%. Show the expected cash flows per year for the project. Show work
Lakonishok Equipment has an investment opportunity in Europe. The project costs €12 million and is expected...
Lakonishok Equipment has an investment opportunity in Europe. The project costs €12 million and is expected to produce cash flows of €2.7 million in year 1, €3.1 million in year 2, and €2.8 million in year 3. The current spot exchange rate is $1.3/€. The current risk-free rate in the United States is 5 percent, compared to that in Europe of 3.5 percent. The appropriate discount rate for the project is estimated to be 18 percent, the U.S. cost of...
Lakonishok Equipment has an investment opportunity in Europe. The project costs €12 million and is expected...
Lakonishok Equipment has an investment opportunity in Europe. The project costs €12 million and is expected to produce cash flows of €2.1 million in Year 1, €2.5 million in Year 2, and €3.6 million in Year 3. The current spot exchange rate is $1.36 / €; and the current risk-free rate in the United States is 2.9 percent, compared to that in Europe of 2.1 percent. The appropriate discount rate for the project is estimated to be 15 percent, the...
A new project has an intial cost of $480,000 with an expected life of 8 years.
A new project has an intial cost of $480,000 with an expected life of 8 years.  The project is expected to have earnings before depreciation and taxes of $125,000 per year.  If the projected is being depreciated over a 3-year term and the firm’s tax rate is 40%, calculate the cashflows of the project over its estimated life.
A new project has an intial cost of $350,000 with an expected life of 7 years....
A new project has an intial cost of $350,000 with an expected life of 7 years. The project is expected to have earnings before depreciation and taxes of $125,000 per year. If the projected is being depreciated over a 4-year term and the firm’s tax rate is 40%, calculate the cashflows of the project over its estimated life.
We are evaluating a project that costs $972,000, has a life of twelve years, and has...
We are evaluating a project that costs $972,000, has a life of twelve years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 117,000 units per year. Price per unit is $35, variable cost per unit is $25, and fixed costs are $989,496 per year. The tax rate is 22 percent, and we require a return of 21 percent on this project. The projections given for price,...
We are evaluating a project that costs $743,000, has a life of eight years, and has...
We are evaluating a project that costs $743,000, has a life of eight years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 124,000 units per year. Price per unit is $37, variable cost per unit is $20, and fixed costs are $749,687 per year. The tax rate is 22 percent, and we require a return of 21 percent on this project. The projections given for price,...
We are evaluating a project that costs $1,100,000, has a life of 10 years, and has...
We are evaluating a project that costs $1,100,000, has a life of 10 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 47,000 units per year. Price per unit is $50, variable cost per unit is $25, and fixed costs are $820,000 per year. The tax rate is 21 percent and we require a return of 16 percent on this project. Suppose the projections given for...
We are evaluating a project that costs $1,080,000, has a life of 10 years, and has...
We are evaluating a project that costs $1,080,000, has a life of 10 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 52,000 units per year. Price per unit is $50, variable cost per unit is $30, and fixed costs are $730,000 per year. The tax rate is 25 percent and we require a return of 15 percent on this project. Suppose the projections given for...
We are evaluating a project that costs $709,000, has a life of fifteen years, and has...
We are evaluating a project that costs $709,000, has a life of fifteen years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 96,000 units per year. Price per unit is $43, variable cost per unit is $21, and fixed costs are $723,889 per year. The tax rate is 23 percent, and we require a return of 16 percent on this project. The projections given for price,...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT