Initial Investment: $1,000,000WACC: 10%Revenue: 850,000COGS: $540,000Operating Expenses: $50,000Depreciation Expense: $125,000Tax Expense: $28,350What is the Operational Cash Flow for the first year?
AFTER TAX CASH FLOW
Initial investment in the asset $80,000
Annual revenues $50,000
Annual expenses $20,000
Duration 6 years.
Since the asset was in very good condition, it was sold ate the end
of the 6 th year in $35,000 instead of $20,000.
Calculate the After Tax Cash Flow and After Tax NPV for this
project, using a tax rate of 30%, an after tax MARR of 12% per
year
Year 1 Year 2
Revenues 128.9 151.6
COGS and Operating Expenses (other than depreciation) 49.6
52.7
Depreciation 24.9 43.5
Increase in Net Working Capital 3.4 8.1
Capital Expenditures 27.3 43.2
Marginal Corporate Tax Rate 35% 35%
a. What are the incremental earnings for this project for years
1 and 2? (Note: Assume any incremental cost of goods sold is
included as part of operating expenses.)
b. What are the free cash flows for this project for years 1
and 2?...
RipplingBrook Mining Co. had operating cashflow equal to
$50,000. Depreciation expense during the year was $7,500. Interest
expense was $3,000 and the company paid down $3,500 in long term
debt. The company spent $20,000 on new equipment and had an
increase in working capital of $1,000. What was the cash flow to
stockholders?
2. RipplingBrook Mining Co. had operating cashflow equal to
$50,000. Depreciation expense during the year was $7,500. Interest
expense was $3,000 and the company paid down $3,500 in long term
debt. The company spent $20,000 on new equipment and had an
increase in working capital of $1,000. What was the cash flow to
stockholders?
XYZ Inc., has sales of $800,000, costs of $375,000,
depreciation expense of $85,000, interest expense of $50,000, and a
tax rate of 35%. What is the net income of this firm? (10
Points)The income statement for the company is(Use Excel and Excel Formulas to answer)
A project will cut firm’s operating costs by $50,000. The
project requires an initial investment of $30,000 and be
depreciated using straight-line depreciation to a zero book value
over the 4-year life of the project. The company has a marginal tax
rate of 35 percent. What is the operating cash flow of the project
using the tax shield approach? a. $42,800 b. $35,125 c. $40,450 d.
$38,930
Project K has an initial required investment of $1,000,000. The
project will result in operating cash inflows of $200,000 per year
for Years 1-3, $100,000 per year for Years 4-9, and have no cash
flows in Year 10 and beyond. Calculate the payback period for
Project K.