Expects net working capital to increase

Assignment Help Financial Management

Reference no: EM131351321

KADS, Inc., has spent $450,000 on research to develop a new computer game. The firm is planning to spend $250,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $55,000. The machine has an expected life of three years, a $80,000 estimated resale value, and falls under the MACRS 7-year class life. Revenue from the new game is expected to be $650,000 per year, with costs of $300,000 per year. The firm has a tax rate of 40 percent, an opportunity cost of capital of 13 percent, and it expects net working capital to increase by $125,000 at the beginning of the project. What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)

Reference no: EM131351321

Questions Cloud

What is the aftertax cost of debt-target capital structure : Bargeron Corporation has a target capital structure of 61 percent common stock, 6 percent preferred stock, and 33 percent debt. Its cost of equity is 12.6 percent, the cost of preferred stock is 5.6 percent, and the pretax cost of debt is 7.3 percent..

Sixth fourth bank has an issue of preferred stock : Sixth Fourth Bank has an issue of preferred stock with a $6.30 stated dividend that just sold for $125 per share. What is the bank’s cost of preferred stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 deci..

The company will maintain this dividend : Estes Park Corp. pays a constant $7.70 dividend on its stock. The company will maintain this dividend for the next 10 years and will then cease paying dividends forever If the required return on this stock is 10 percent, what is the current share pri..

What is company cost of equity capital : Halestorm Corporation’s common stock has a beta of 1.25. Assume the risk-free rate is 5 percent and the expected return on the market is 12.5 percent. What is the company’s cost of equity capital?

Expects net working capital to increase : KADS, Inc., has spent $450,000 on research to develop a new computer game. The firm is planning to spend $250,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $55..

Best estimate of the company cost of equity : Stock in CDB Industries has a beta of .99. The market risk premium is 7.4 percent, and T-bills are currently yielding 4.4 percent. CDB’s most recent dividend was $2.80 per share, and dividends are expected to grow at an annual rate of 5.4 percent ind..

What is URAs indifference level of EBIT : URA, Incorporated, has operating income of $5 million, total assets of $45 million, outstanding debt of $20 million, and annual interest expense of $3 million. What is URA’s indifference level of EBIT? Given its current situation, might URA benefit f..

What is the company sustainable growth rate : The Wintergrass Company has an ROE of 13.9 percent and a payout ratio of 40 percent. What is the company’s sustainable growth rate?

What is the quick ratio : Galaxy United, Inc. 2009 Income Statement ($ in millions) Net sales $8,500 Less: Cost of goods sold 7,210 Less: Depreciation 400 Earnings before interest and taxes 890 Less: Interest paid 86 Taxable Income 804 Less: What is the quick ratio for 2009? ..

User Account

All Pages