Question

In: Finance

Which Tax Rate do I use for a capital budgeting cash flow statement: marginal or effective...

Which Tax Rate do I use for a capital budgeting cash flow statement: marginal or effective tax rate?

Solutions

Expert Solution

I have answered the question below

Please up vote for the same and thanks!!!

Do reach out in the comments for any queries

Answer:

Marginal tax rate is used for capital budgeting cash flow statement

Example where the marginal tax rate is 40%


Related Solutions

Create a Free Cash Flow and Discounted Cash Flow Statement. The tax rate and discount rate...
Create a Free Cash Flow and Discounted Cash Flow Statement. The tax rate and discount rate are not given, so the percentage below is an assumption. If there are better assumptions, then feel free to use that with a description as to why it is better. The EBIT is from the company that is trying to bought; their stand alone basis projected income statement and balance sheet. Show all calculations.   Would you say the merger is a good idea? 2015...
Capital budgeting and cash flow analysis
Th e Taylor Mountain Uranium Company currently has annual cash revenues of $1.2 millionand annual cash expenses of $700,000. Depreciation amounts to $200,000 per year.Th ese fi gures are expected to remain constant for the foreseeable future (at least 15 years).Th e fi rm’s marginal tax rate is 40 percent.A new high-speed processing unit costing $1.2 million is being considered as a potentialinvestment designed to increase the fi rm’s output capacity. Th is new piece of equipmentwill have an estimated...
Capital Budgeting Analysis - Use the information below to prepare for cash flow analysis in a...
Capital Budgeting Analysis - Use the information below to prepare for cash flow analysis in a table for both scenarios Please create your table from Colume L and keep this statement here as it is. You must show the analysis and results from both scenarios based on your cash flow analysis table and make your decision Decision without data support will be given 0 points. Micro-Technologies is a Bio Tech research firm that is conducting research on a cure for...
Digg company is evaluation two projects for next year’s capital budgeting. The after-tax cash flow ($)...
Digg company is evaluation two projects for next year’s capital budgeting. The after-tax cash flow ($) (including depreciation) are following: Project A                              Project B Year 0    -6000 -17500 Year 1    2000                                       5600 Year 2    2000                                       5600 Year 3    2000                                       5600 Year 4    2000                                       5600 Year 5    2000                                       5600 Year 6    4000                                       9000 If company’s WACC is 13%, find NPV, IRR, Payback and discount payback for each project. If the projects are mutually exclusive what is your recommendation to the company.
Digg company is evaluation two projects for next year’s capital budgeting. The after-tax cash flow ($)...
Digg company is evaluation two projects for next year’s capital budgeting. The after-tax cash flow ($) (including depreciation) are following: Project A                              Project B Year 0    -6000 -17500 Year 1    2000                                       5600 Year 2    2000                                       5600 Year 3    2000                                       5600 Year 4    2000                                       5600 Year 5    2000                                       5600 Year 6    4000                                       9000 If company’s WACC is 13%, find NPV, IRR, Payback and discount payback for each project. If the projects are mutually exclusive what is your recommendation to the company....
Bigg company is evaluation two projects for next year’s capital budgeting. The after-tax cash flow ($)...
Bigg company is evaluation two projects for next year’s capital budgeting. The after-tax cash flow ($) (including depreciation) are following: Project A                              Project B Year 0    -7500 -17500 Year 1    2000                                       5600 Year 2    2000                                       5600 Year 3    2000                                       5600 Year 4    2000                                       5600 Year 5    2000                                       5600 Year 6    4000                                       9000 If company’s WACC is 13%, find NPV, IRR, Payback and discount payback for each project. If the projects are mutually exclusive what is your recommendation to the company.(show...
Which of the following statements regarding cash flow is correct? Multiple Choice In evaluating capital budgeting...
Which of the following statements regarding cash flow is correct? Multiple Choice In evaluating capital budgeting decisions, cash flows should be valued on a pre-tax basis for consistency's sake. Incremental cash flows should include opportunity costs but ignore sunk costs. Cash flow should be recognized only when it has accrued according to GAAP practices. Cash flow measures changes in the firm's cash account. After-tax cash flow is usually identical to accounting profits when accrual accounting is used for financial statement...
how do I calculate this after tax cash flow from salvage? tax is 35% salvage value...
how do I calculate this after tax cash flow from salvage? tax is 35% salvage value is $4,800,000
In capital budgeting, a company might use which of the following as its discount rate? Return...
In capital budgeting, a company might use which of the following as its discount rate? Return on total assets After-tax cost of debt Times interest earned Weighted average cost of capital Which causes a company to become leveraged? Issuing high amounts of common stock Making an initial public offer (IPO) Having high fixed costs Having high variable costs Which of the following correctly describes how a firm's required return is determined? Using the going market rate for risk-free securities As...
Calculate (i)Cost of Production and Profitability Statement .(ii) Cash flow Statement.(iii)Calculate the cost of Capital; (iv)...
Calculate (i)Cost of Production and Profitability Statement .(ii) Cash flow Statement.(iii)Calculate the cost of Capital; (iv) NPV of the Project;(v)DSCR. Zinc Unit Installed Capacity    First Year Second Year    Third Year…    Tonnes    1000000 750000 800000    1000000 SRevenue Projection : Zinc is expected to be sold at Rs per ton Rs2.1 lakh. Cost of the Project: The cost of the project works out as below: a) Fixed Assets or Long Term Loan: Rs 3145 crores b) Working...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT