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In: Accounting
Calculating 'cash flows at the end' Today (Year 0), Kangaroo Enterprises is evaluating whether to purchase...
Calculating 'cash flows at the end'
Today (Year 0), Kangaroo Enterprises is evaluating whether to purchase a new jetboat to operate scenic thrill rides around Lord Howe Island. The company currently has two other boats offering a snorkelling tour and a glass bottom boat tour. The jetboat costs $1,800,000. The jetboat project is expected to last ten years. The Australian Tax Office states the jetboat should be depreciated to zero over a 15-year life.
In Year 0, the new jetboat tour will result in an increase in inventory for Kangaroo Enterprises from $17,000 to $24,000. The company anticipates that accounts payable immediately required for the jetboat tour will increase by $11,000.
The company has already agreed to sell the jetboat in ten years’ time to an unrelated firm for $250,000.
The company is expecting the jetboat rides will be very popular and are anticipating paying a one-off special dividend to shareholders of $150,000 at the end of the project.
Assume the company tax rate is 30%.
What are the 'cash flows at the end'?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
RAK Corp. is evaluating a project with the following cash flows: Year Cash Flow 0...
RAK Corp. is evaluating a
project with the following cash flows:
Year
Cash Flow
0
–$
28,600
1
10,800
2
13,500
3
15,400
4
12,500
5
–
9,000
The company uses a discount rate
of 13 percent and a reinvestment rate of 6 percent on all of its
projects.
Calculate the MIRR of the project using the discounting
approach. (Do not round intermediate calculations. Enter
your answer as a percent rounded to 2 decimal places, e.g.,
32.16.)...
Mittuch Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$...
Mittuch Corp. is evaluating a project with the following cash
flows: Year Cash Flow 0 –$ 15,400 1 6,500 2 7,700 3 7,300 4 6,100 5
–3,500 The company uses an interest rate of 8 percent on all of its
projects. Calculate the MIRR of the project using all three
methods. (Do not round intermediate calculations and enter your
answers as a percent rounded to 2 decimal places, e.g., 32.16.)
MIRR Discounting approach % Reinvestment approach % Combination
approach %
RAK Corp. is evaluating a project with the following cash flows: Year Cash Flow 0...
RAK Corp. is evaluating a
project with the following cash flows:
Year
Cash Flow
0
–$
29,500
1
11,700
2
14,400
3
16,300
4
13,400
5
–
9,900
The company uses a discount rate
of 13 percent and a reinvestment rate of 6 percent on all of its
projects.
1. Calculate the MIRR of the project using the discounting
approach. (Do not round intermediate calculations. Enter
your answer as a percent rounded to 2 decimal places, e.g.,...
Chamberlain Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$...
Chamberlain Corp. is evaluating a project with the following
cash flows: Year Cash Flow 0 –$ 23,000 1 8,400 2 9,200 3 8,900 4
7,500 5 – 5,000 Required: The company uses an interest rate of 6
percent on all of its projects. Calculate the MIRR of the project
using all three methods. (Do not round intermediate calculations.
Round your answers to 2 decimal places (e.g., 32.16).)
MIRR Discounting approach %
Reinvestment approach %
Combination approach %
Solo Corp. is evaluating a project with the following cash flows: Year 0 Cash Flow –$...
Solo Corp. is evaluating a project with the following cash
flows:
Year 0 Cash Flow –$ 29,100
Year 1 Cash Flow $11,300
Year 2 Cash Flow $14,000
Year 3 Cash Flow $15,900
Year 4 Cash Flow $13,000
Year 5 Cash Flow $– 9,500
The company uses an interest rate of 8 percent on all of its
projects.
a. Calculate the MIRR of the project using the discounting
approach.
b. Calculate the MIRR of the project using the reinvestment
approach.
c....
Solo Corp. is evaluating a project with the following cash flows: Year 0 Cash Flow –$...
Solo Corp. is evaluating a project with the following cash
flows:
Year 0 Cash Flow –$ 28,900
Year 1 Cash Flow $11,100
Year 2 Cash Flow $13,800
Year 3 Cash Flow $15,700
Year 4 Cash Flow $12,800
Year 5 Cash Flow $– 9,300
The company uses a discount rate of 13 percent and a
reinvestment rate of 6 percent on all of its projects.
a.)Calculate the MIRR of the project using the discounting
approach.
b.) Calculate the MIRR of the...
RAK Corp. is evaluating a project with the following cash flows: Year Cash Flow 0...
RAK Corp. is evaluating a project with the following cash
flows:
Year Cash Flow
0 –$ 29,800
1 12,000
2 14,700
3 16,600
4 13,700
5 – 10,200
The company uses a discount rate of 13 percent and a
reinvestment rate of 6 percent on all of its projects.
Calculate the MIRR of the project using the discounting
approach. (Do not round intermediate calculations. Enter your
answer as a percent rounded to 2 decimal places, e.g., 32.16.)
...
RAK Corp. is evaluating a project with the following cash flows: Year Cash Flow 0...
RAK Corp. is evaluating a
project with the following cash flows:
Year
Cash Flow
0
–$
29,700
1
11,900
2
14,600
3
16,500
4
13,600
5
–
10,100
The company uses a discount rate
of 12 percent and a reinvestment rate of 7 percent on all of its
projects.
Calculate the MIRR of the project using the discounting
approach. (Do not round intermediate calculations. Enter
your answer as a percent rounded to 2 decimal places, e.g.,
32.16.)...
Solo Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$...
Solo Corp. is evaluating a project with the following cash
flows:
Year
Cash Flow
0
–$
29,200
1
11,400
2
14,100
3
16,000
4
13,100
5
–
9,600
The company uses an interest rate of 9 percent on all of its
projects.
1. Calculate the MIRR of the project using the discounting
approach.
2. Calculate the MIRR of the project using the reinvestment
approach.
3. Calculate the MIRR of the project using the combination
approach.
Reinvestment rate not given.
Solo Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$...
Solo Corp. is evaluating a project with the following cash
flows: Year Cash Flow 0 –$ 29,500 1 11,700 2 14,400 3 16,300 4
13,400 5 – 9,900
The company uses a discount rate of 13 percent and a
reinvestment rate of 6 percent on all of its
projects.
Calculate the MIRR of the project using the discounting
approach. (Do not round intermediate calculations. Enter your
answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Calculate the MIRR...
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