Question
In: Finance
1- You are evaluating a capital project with a Net Investment of $400,000, which includes an...
1- You are evaluating a capital project with a Net Investment of $400,000, which includes an increase in net working capital of $16,000. The project has a life of 12 years with an expected salvage value of $3,000. The project will be depreciated via simplified straight-line depreciation. Revenues are expected to increase by $90,000 per year and operating expenses by $8,000 per year. The firm's marginal tax rate is 40 percent and the cost of capital for this project is 15%. What is the net present value of this project? Round to the nearest penny. Do not include a dollar sign.
2-XYZ Company is considering whether a project requiring the
purchase of new equipment is worth investing. The cost of a new
machine is $340,000 including shipping and installation. The
project will increase annual revenues by $400,000 and annual costs
by $100,000. The machine will be depreciated via straight-line
depreciation for three years to a salvage value of
$40,000. If the firm does this project, $30,000 in net working
capital will be required, which will be fully recaptured at the end
of the project. The estimated salvage value of the machine after
the project is $30,000. What is the terminal value of this project
if the tax rate is 40%? Round to the nearest penny. Do not include
a dollar sign in your answer.
Solutions
jeff jeffy answered 9 months agoRelated Solutions
You are evaluating a capital project with a Net Investment of $400,000, which includes an increase...
You are evaluating a capital project with a Net Investment of
$400,000, which includes an increase in net working capital of
$16,000. The project has a life of 12 years with an expected
salvage value of $3,000. The project will be depreciated via
simplified straight-line depreciation. Revenues are expected to
increase by $90,000 per year and operating expenses by $8,000 per
year. The firm's marginal tax rate is 40 percent and the cost of
capital for this project is 15%....
You are evaluating a capital project with a Net Investment of $400,000, which includes an increase...
You are evaluating a capital project with a Net Investment of
$400,000, which includes an increase in net working capital of
$16,000. The project has a life of 12 years with an expected
salvage value of $3,000. The project will be depreciated via
simplified straight-line depreciation. Revenues are expected to
increase by $90,000 per year and operating expenses by $8,000 per
year. The firm's marginal tax rate is 40 percent and the cost of
capital for this project is 15%....
You are evaluating a capital project with a Net Investment of $800,000, which includes an increase...
You are evaluating a capital project with a Net Investment of
$800,000, which includes an increase in net working capital of
$8,000. The project has a life of 20 years with an expected salvage
value of $100,000. The project will be depreciated via simplified
straight-line depreciation. Revenues are expected to increase by
$120,000 per year and operating expenses by $14,000 per year. The
firm's marginal tax rate is 40 percent and the cost of capital for
this project is 12%....
You are evaluating a capital project with a Net Investment of $800,000, which includes an increase...
You are evaluating a capital project with a Net Investment of
$800,000, which includes an increase in net working capital of
$8,000. The project has a life of 20 years with an expected salvage
value of $100,000. The project will be depreciated via simplified
straight-line depreciation. Revenues are expected to increase by
$120,000 per year and operating expenses by $14,000 per year. The
firm's marginal tax rate is 40 percent and the cost of capital for
this project is 12%....
You are evaluating a capital project with a Net Investment of $800,000, which includes an increase...
You are evaluating a capital project with a Net Investment of
$800,000, which includes an increase in net working capital of
$8,000. The project has a life of 20 years with an expected salvage
value of $100,000. The project will be depreciated via simplified
straight-line depreciation. Revenues are expected to increase by
$120,000 per year and operating expenses by $14,000 per year. The
firm's marginal tax rate is 40 percent and the cost of capital for
this project is 12%....
You are evaluating a capital project with a Net Investment of $95,000, which includes an increase...
You are evaluating a capital project with a Net Investment of
$95,000, which includes an increase in net working capital of
$5,000. The project has a life of 9 years with an expected salvage
value of $3,000. The project will be depreciated via simplified
straight-line depreciation. Revenues are expected to increase by
$20,000 per year and operating expenses by $4,000 per year. The
firm's marginal tax rate is 40 percent and the cost of capital for
this project is 8%....
Which methods of evaluating a capital investment project use cash flows as a measurement basis?
Which methods of evaluating a capital investment project use cash flows as a measurement basis? Net present value, accounting rate of return, and internal rate of return. Internal rate of return, payback period, and accounting rate of return. Accounting rate of return, net present value, and payback period. Payback period, internal rate of return, and net present value. Net present value, payback period, accounting rate of return, and internal rate of return.
KK Enterprises is evaluating a project with the following characteristics: Fixed capital investment is $2,000,000. The...
KK Enterprises is evaluating a project with the following
characteristics:
Fixed capital investment is $2,000,000.
The project has an expected six-year life.
The initial investment in net working capital is $200,000. At
the end of each year, net working capital must be increased so that
the cumulative investment in net working capital is one-sixth of
the next year’s projected sales.
The fixed capital is depreciated 30 percent in year 1, 35
percent in year 2, 20 percent in year 3,...
You are evaluating Project B requiring an initial investment of 50m in year 0 after which...
You are evaluating Project B requiring an initial investment of
50m in year 0 after which it will generate cash flows of 20m at the
end of years 10 to 20. The cost of capital is 10%.
a. What is the project’s NPV?
b. What is its IRR? What is its payback period?
d. What is its discounted payback period?
1) W XYZ Limited is evaluating Project X , which requires an initial investment of RO40,000...
1) W XYZ Limited is evaluating Project X , which
requires an initial investment of RO40,000 . The expected net cash
flows are RO15,000 pa for five years at today's prices . However
these are expected to rise by 6.0 % pa because of inflation . The
firm's cost of capital is 13 % . Find the NPV by : ( a )
discounting money cash flows ( b ) discounting real cash flows
.
2) XYZ Limited is evaluating...
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