Find the year zero cash flow

Assignment Help Financial Management

Reference no: EM131990196

Spend 100000 on Machine C. You will need 5000 more in net working capital. C is three year MACRS. The cost of funds is 8% and the tax rate is 40%.

C is expected to increase revenues by 45000 and costs by 7000 for each of the next three years. You think you can sell C for 10000 at the end of the three year period.

a. Find the year zero cash flow. (-105000)

b. Find the depreciation for each year on the machine. (33300; 44450; 14810; 7410)

c. Find the depreciation tax shield for the three operating years. (13332, 17780, 5924)

e. What is the projects contribution to operations each year, ignoring depreciation effects. (22800)

f. What is the cash flow effect of selling the machine? (8964)

g. Find the total CF for each year.

0: (105000)

1: 36132

2: 40580

3: 42688

Answers provided by professor are included with this question. I am unable to determine how to find the answers for e-g. Any assistance is appreciated.

Reference no: EM131990196

Questions Cloud

Discuss the use of cohort study designs : Cohort studies have proven particularly useful in the investigation of pediatric health and disease. Discuss, and provide specific examples for the use.

Plot flux as a function of time : CHE 626 Transport Phenomena Assignment. Second part of the problem is to determine flux into the anterior chamber (x = L). Plot flux as a function of time

What changes or recommendations should be made : What changes or recommendations should be made? Would you try to influence your area of interest? Why or why not? How?

Determine the economic service life of the asset : A new asset is available for $226,000. At a MARR of 15%, determine the economic service life of the asset.

Find the year zero cash flow : Spend 100000 on Machine C. You will need 5000 more in net working capital. C is three year MACRS. The cost of funds is 8% and the tax rate is 40%.

What are the three principal forms of business organization : What are the three principal forms of business organization? What are the advantages and disadvantages of each?

What is the current price of share of brennan stock : What is the current price of a share of Brennan Co. Stock? What will be the price of a share of Brennan Co. Stock in 20 years?

Describe the key nutrients on the nutrition facts label : Describe the key nutrients on the nutrition facts label and identify the healthy and unhealthy nutrients.

Expect next year per-share dividend on shares : Suppose you expect next year's per-share dividend on shares of the Newington Co. to be 48.00. what is a share of Newington Co. stock worth to you today?

User Account

All Pages