Considering new six-year expansion project

Assignment Help Financial Management
Reference no: EM131540732

Summer Tyme. Inc.. is considering a new 6-year expansion project that requires an initial fixed asset investment of $3, 726 million. The fixed asset will be depreciated straight-line to zero over its 6-year tax life, after which time it will be worthless. The project is estimated to generate $3.312.000 in annual sales, with costs of $1, 324, 800. If the tax rate is 34 percent, the OCF for this project is $. (Do not include the dollar sign ($). Round your answer to the nearest whole dollar amount, (e.g.. 32))

Reference no: EM131540732

Questions Cloud

Explain why increasing certainty of cash flow : Explain why increasing certainty of cash flow would improve the value of business
Capital asset pricing model-company risk premium : What is the market expected risk premium? Using Capital Asset Pricing Model (CAPM), what is the expect company’s risk premium?
Calculate the gross proceeds per share : Howett Pockett, Inc., plans to Issue 10.1 million new shares of Its stock. Calculate the gross proceeds per share.
What amount of the payroll department costs : What amount of the payroll department costs wll be allocated to the molding department?
Considering new six-year expansion project : Summer Tyme. Inc.. is considering a new 6-year expansion project that requires an initial fixed asset investment of $3, 726 million.
Describe the tax advantages and disadvantages : Explain one relevant tax issue for Patty and describe the tax advantages and disadvantages of what she may be faced with.
Properly resolved and documented in the audit papers : Which member of the audit engagement team has the primary responsibility to ensure that such issues are properly resolved and documented in the audit papers?
Compute the price of the preferred stock : The preferred stock of Denver Savings and Loan pays an annual dividend of $7.65. Compute the price of the preferred stock.
Financial analyst to appraise the bonds : You are called in as a financial analyst to appraise the bonds of Olsen’s Clothing Stores. Compute the price of the bonds based on semiannual analysis.

Reviews

Write a Review

Financial Management Questions & Answers

  What is company cost of equity capital

David Ortiz Motors has a target capital structure of 35% debt and 65% equity. The yield to maturity on the company's outstanding bonds is 10%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 10.91%. What is the com..

  Reviewing two mutually exclusive projects

You are reviewing two mutually exclusive projects. You have used several methods of evaluating their profitability. All else being equal, which one will you choose?

  Calculate the share price for bills bakery

Bill’s Bakery expects earnings per share of $3.22 next year. Current book value is $5.2 per share. The appropriate discount rate for Bill’s Bakery is 14 percent. Calculate the share price for Bill’s Bakery if earnings grow at 4 percent forever.

  Number of equivalent units of conversion for the period was

first-out cost method is used and all materials are added at the beginning of the process. The number of equivalent units of conversion for the period was

  How is liquidity a source of risk

How is liquidity a source of risk? Explain how the stockholders of a company hold an implicit put option written by the creditors ?

  Time constraint on investment project payback requirements

Ferengi, Inc. is subject to an applicable corporate tax rate of 35 percent, and the weighted average cost of capital (WACC) of 12.5 percent. There is no specific time constraint on investment project payback requirements. Instead of Plan A, Ferengi c..

  What is the cost of goods sold for the corporation

Corporation has current liabilities of $450,000.00, a quick ratio of 1.8, inventory turnover of 5.0, and a current ratio of 3.5. What is the cost of goods sold for the corporation?

  What is the equivalent annual cost of this machine

Tool Makers, Inc. uses tool and die machines to produce equipment for other firms. The initial cost of one customized tool and die machine is $850,000. This machine costs $10,000 a year to operate. Each machine has a life of 3 years before it is repl..

  What is the common stock for year 2

If the preferred stock is cumulative, determine the total amount of cash dividends paid to each class of stock in each of the three years. What is the Common Stock for year 2?

  Redemption based on her expectations of interest rates

Show transcribed image text ABC Corporation has issued callable bonds that have 8% annual coupon rate paid semianmally. Bonds could be redeemed starting from the end of year 2. The call premium equals the amount of the annual coupon.  What is the val..

  What is the firms cost of preferred stock

The preferred stock of Dolphin Pools pays an annual dividend of $6.25 a share and sells for $42 a share. The tax rate is 35 percent. What is the firm's cost of preferred stock?

  What is the firms net new long-term debt

During 2009, Raines Umbrella Corp. had sales of $748,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $563,000, $100,000, and $126,000, respectively. In addition, the company had an interest expense of $100..

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