Annual? after-tax cash flows associated with project

Assignment Help Financial Management
Reference no: EM131923811

?(New project analysis?) Raymobile Motors is considering the purchase of a new production machine for ?$600,000. The purchase of this machine will result in an increase in earnings before interest and taxes of ?$150,000 per year. To operate this machine? properly, workers would have to go through a brief training session that would cost ?$35,000 after taxes. It would cost ?$7,000 to install the machine properly.? Also, because the machine is extremely? efficient, its purchase would necessitate an increase in inventory of ?$40,000. This machine has an expected life of 10 ?years, after which it will have no salvage value. Assume simplified? straight-line depreciation and that this machine is being depreciated down to? zero, a 31 percent marginal tax? rate, and a required rate of return of 17 percent. a. What is the initial outlay associated with this? project? b. What are the annual? after-tax cash flows associated with this project for years 1 through? 9? c. What is the terminal cash flow in year 10 ?(what is the annual? after-tax cash flow in year 10 plus any additional cash flows associated with the termination of the? project)? d. Should the machine be? purchased?

Reference no: EM131923811

Questions Cloud

What are the expected returns of the two? stocks : What are the expected returns of the two? stocks? What are the standard deviations of the returns of the two? stocks?
Saving for retirement : Your client is 38 years old. She wants to begin saving for retirement, If she follows your advice, how much money will she have at 65?
The beta of stock that investors expect to return : If the expected rate of return on the market portfolio is 14% and T-bills yield 5%, what must be the beta of a stock that investors expect to return 10%?
Is the yen expected to get stronger or weaker : Is the yen expected to get stronger or weaker? What would you estimate is the difference between the inflation rates of the United States and Japan?
Annual? after-tax cash flows associated with project : What are the annual? after-tax cash flows associated with this project for years 1 through? 9? What is the initial outlay associated with this? project?
What is the annual? after-tax cash flow in year : what is the annual? after-tax cash flow in year 10 plus any additional cash flows associated with the termination of the? project?
Standard deviation of return to leaning tower of shareholder : Calculate the expected rate of return and standard deviation of return to Leaning Tower of Pita shareholders.
Calculate the variance and standard deviation of each stock : Calculate the variance and standard deviation of each stock. calculate the returns in each month of portfolio that invests equal amount each month in stocks.
Calculating free cash flows : Calculating free cash flows?. What is the ?project's NPV given required rate of return of 11 ?percent?

Reviews

Write a Review

Financial Management Questions & Answers

  What is arithmetic average return over ten-year period

What is the arithmetic average return over the? 10-year period? What is the geometric average return over the? 10-year period?

  What is expected growth rate after year three

If DeLaval’s required rate of return is 13%, what is the expected growth rate after year 3?

  Use a regression model to study the effects of trading days

Use a regression model to study the effects of trading days on the index return. What is the fitted model? - Are the weekday effects significant in the returns at the 5% level?

  The implications of real-time bidding for consumers privacy

List and describe the implications of real-time bidding for consumers' privacy.

  What is fair price today for each share of common stock

If a return of 12% is required during the next three years, what is a fair price today for each share of common stock?

  What rate of return must he earn

Mr. Fish wants to build a house in 8 years. He estimates that the total cost will be $150,000. If he can put aside $11,000 at the end of each year, what rate of return must he earn in order to have the amount needed?

  Bank that expects interest rates to increase in the future

"A bank that expects interest rates to increase in the future will want to hold more rate-sensitive assets and fewer rate-sensitive liabilities."

  Compute the monthly break-even sales in units and dollars

Compute the expected total variable cost per bottle and the expected contribution margin ratio. Compute the monthly break-even sales in units and dollars.

  What is the eoq for this product in units

What is the EOQ for this product in units

  A company can shorten its cash cycle by

A company can shorten its cash cycle by:

  What was the most recent dividend per share paid on stock

Feeback Corporation stock currently sells for $82 per share. The market requires a return of 10.2 percent on the firm’s stock. If the company maintains a constant 3.1 percent growth rate in dividends, what was the most recent dividend per share paid ..

  What is the portfolio variance

A portfolio has 45 percent of its funds invested in Security One and 55 percent invested in Security Two. Security One has a standard deviation of 6 percent. Security Two has a standard deviation of 12 percent. The securities have a coefficient of co..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd