User Account

All Pages

Calculate the net present value of the cash flow stream

Assignment Help Financial Accounting
Reference no: EM132992144

Question 1 - Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $32,000 and will be depreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $8,000. The grill will have no effect on revenues but will save Johnny's $16,000 in energy expenses. The tax rate is 30%.

Required -

a. What are the operating cash flows in each year?

b. What are the total cash flows in each year?

c. Assuming the discount rate is 12%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased?

Question 2 - Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $32,000 and will be depreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $8,000. The grill will have no effect on revenues but will save Johnny's $16,000 in energy expenses. The tax rate is 30%.

Required -

a. What are the operating cash flows in each year?

b. What are the total cash flows in each year?

c. Assuming the discount rate is 12%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased?

Reference no: EM132992144

Questions Cloud

Prepare the consolidation worksheet entries for Saqa Ltd : Prepare the consolidation worksheet entries for Saqa Ltd for the year ended 30 June 2020. Assume an income tax rate of 30%
Clause influence the prime contractor management : A prime contract includes FAR 52.222-41, Service Contract Labor Standards. How will the inclusion of this clause influence the prime contractor's management of
Estimate cash receipts for each month of the first quarter : Credit sales in December 2020 are expected to be $216,000. Estimate cash receipts for each month of the first quarter of 2021
What is carpet conversion price for its concvertible bonds : The expected constant growth rate of yhe stock is 5,5%. What is carpet's inc conversion price for its concvertible bonds? What is the conversion value at t=5
Calculate the net present value of the cash flow stream : Assuming the discount rate is 12%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased
What action you recommend regarding ranbaxy partnership : What action would you recommend regarding the Ranbaxy partnership? What are the implications of your recommendation? How would you implement this
Calculate the price of the bond : Business raised $2 million by issuing a 7-year bond issue on the 31st of December 2018. Calculate the price of the bond on the 8th of June 2020
Prepare general journal entries for Ella Ltd : Prepare general journal entries for Ella Ltd to record all the above events in 2020 for its investment in Monica Ltd, using the equity method
What are the estimated cash collections in Feb : VIC also receives $10 000 monthly cash income from an investment. What are the estimated cash collections in Feb

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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