Consider the following debt-free project for a machine: Physical Lifespan 5 years Capital Expense, Year 0...

Consider the following debt-free project for a machine: Physical Lifespan 5 years Capital Expense, Year 0 $13,000 EBITDA / Year $8,000 Cost of Capital 5.3% Tax Rate 22% Depreciation Life 4 years What is the value of this project? Note: Report answer to 4 decimal places, no rounding.

Expert Solution

Time line		0	1	2	3	4	5



Cost of new machine		-13000

=Initial Investment outlay		-13000



EBIDTA			8000	8000	8000	8000	8000


-Depreciation	Cost of equipment/no. of years		-3250	-3250	-3250	-3250	0

=Pretax cash flows			4750	4750	4750	4750	8000
-taxes	=(Pretax cash flows)*(1-tax)		3705	3705	3705	3705	6240
+Depreciation			3250	3250	3250	3250	0
=after tax operating cash flow			6955	6955	6955	6955	6240





Total Cash flow for the period		-13000	6955	6955	6955	6955	6240
Discount factor=	(1+discount rate)^corresponding period	1	1.053	1.108809	1.1675759	1.2294574	1.2946186
Discounted CF=	Cashflow/discount factor	-13000	6604.938	6272.496	5956.7863	5656.9671	4819.9522
NPV=	Sum of discounted CF=	16311.1399

jeff jeffy answered 11 months ago

Consider a firm with the following Parameters: Physical Lifespan 4 Years Capital Expense, Year 0 $9,000...

Consider a firm with the following Parameters: Physical Lifespan 4 Years Capital Expense, Year 0 $9,000 EBITDA/Year $9,000 Overall Firm Cost of Capital 5.6% Tax Rate 35% Loan $18,000 Interest Payments $737 Depreciation Project Life 6 Years What is the total PV of this firm, including the loan?

Mary is analyzing a capital budgeting project with the following data: Cost of packaging machine 5...

Mary is analyzing a capital budgeting project with the following data: Cost of packaging machine 5 million Annual straight line depreciation over 5 years $1,000,000 Salvage value 200k Working capital 5% of CF’s per year with no initial working capital Operating income 1.2million with a 20% tax rate What is the IRR, the MIRR, the NPV at a 6.35% WACC, and the payback period?

Calculate the following project, at cost of capital of 10% Years Cash Flow (RM) 0 -10,000...

Calculate the following project, at cost of capital of 10% Years Cash Flow (RM) 0 -10,000 1 2000 2 2000 3 4000 4 4000 5 5000 i) calculate NPV (8marks) ii) calculate PI iii) Justified should we accept or reject the project?

Consider a project with the following cash flows: Year 0: -$1160 Year 1: $80 Year 2:...

Consider a project with the following cash flows: Year 0: -$1160 Year 1: $80 Year 2: -$270 Year 3: $580 Year 4: $2290 What is the MIRR of the project if the WACC is 13% and the financing costs are 2% ? Group of answer choices 22.23% 21.18% 23.27%

Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0...

Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0 –$ 68,000 –$ 83,000 1 48,000 47,000 2 43,000 56,000 3 38,000 59,000 The cash flows of Project A are expressed in real terms, whereas those of Project B are expressed in nominal terms. The appropriate nominal discount rate is 11 percent and the inflation rate is 5 percent. Calculate the NPV for each project. (Do not round intermediate calculations and round your answers...

Consider cash flows for projects A and B Year: 0, 1, 2, 3, 4, 5 Project...

Consider cash flows for projects A and B Year: 0, 1, 2, 3, 4, 5 Project A: -$1000, 375, 375, 375, 375,-100 Project B: -$1000, 900, 700, 500, -200, 200 The cost of capital for both projects is 10% 1. Find the NPV and MIRR of projects A and B. If project A and B are mutually exclusive. 2. Find the crossover rate for projects A and B. 3. What is the profitability index for projects A and B? How...

A capital budget project is estimated to have the following after-tax cash flows, by year: 0...

A capital budget project is estimated to have the following after-tax cash flows, by year: 0 1 2 3 4 -$35,000 $13,000 $15,000 $17,000 $19,000 Use the information in the table above for the following questions 11a. through 11f. The company utilizes a discount rate of 9% to evaluate capital projects. You may have rounding errors in your calculations so choose the closest answer. 1. Find NPV, IRR, MIRR, and PI for the project shown above 2. Find Payback and...

Consider the following project: Machine A ($10,000) Inflows Year 1 $4,500 Year 2 4,500 Year 3...

Consider the following project: Machine A ($10,000) Inflows Year 1 $4,500 Year 2 4,500 Year 3 4,500 The IRR for this project is (Write your answer with 2 decimal and as a percentage): （？）Given that the firm's cost of capital is 12%, the MIRR for this project is (Write your answer with 2 decimal and as a percentage) （？）

Consider the following two projects: Project Year 0 Cashflow Year 1 Cashflow Year 2 Cashflow Year...

Consider the following two projects: Project Year 0 Cashflow Year 1 Cashflow Year 2 Cashflow Year 3 Cashflow Year 4 Cashflow Discount rate A -100 40 50 60 N/A .15 B -147 50 70 90 5 .15 An incremental IRR of Project B over Project A is _________%. (Please round to two decimal places, write the number only without "%". i.e. if the answer is "5%", write "5.00")

Consider the following project: Year 0 1 2 3 4 Project A -20.00 8.00 7.00 6.00...

Consider the following project: Year 0 1 2 3 4 Project A -20.00 8.00 7.00 6.00 7.00 Find the payback for this project. (ROUND TO TWO DECIMAL PLACES)

Question