Introducing the more efficient macine is exxpected to

Assignment Help Finance Basics

Reference no: EM13622910

1.For a new project, Indigo Ink Inc. had lanned on depreciating new machinery that costs $300 million on a 4-year, straight line basis. Suppose now, that Armstead decides to depreciate the new machinery on an accelerated basis according to the following depreciation schedule:

year 1: 20% year 2: 32% year 3:19% year 4:12% year 5:11% year 6:6%

The project for which the machinery has been purchased ends in four years, and as a resulf the machinery is going to be sold at its salvage value of $60000000. Under this accelerated depreciation method, what is the after-tax cash flow expected to be generated by the sale of the equipment in year4? Assume the firm's tax rate is 40percent.

A)56400000

B)36000000

C)72200000

D)51600000

E)63600000

2.Wooldridge furniture is replacing its old machine with a more efficient one. The old machine is being depreciated on a straight line basis ata rate of $10000 per year. The old machine has a current book value of $100000 and a 10-year remaining useful and depreciation life. The new machine, which costs $910000, will be depreciated for 10years using simplified straight line depreciation to zero. Introducing the more efficient macine is exxpected to increase revenues by $50000 per year and reduce annual operating costs by $80000. Compute the year 2 cash flow for this project. Assume Wooldridge has a marginal tax rate of 40%.

A)110400

B)49520

C)34520

D)122250

3. Sandbox Inc. is considering opening a new plant that would allow them to manufacture playground equipment out of household refuse. To develop the manufacturing technology, Sandbox Inc. has incurred $8million in R&D costs -5million has come from the company's internal funds and $3millino has been covered by the EPA's "Garbage for the Future" grant program. The project is expected to generate operating cash flows of $10, 15, 25, and 20 million in years 1 through 4. In addition to the initial outlay of $40million required to build the plant(it will be fully depreciated and worthless by the end of the fourth year), Sandbox Inc. will beed to increase its stock of NWC by $5million at the beginning of the project and then by another $5million at the end of year2. Assuming a discount rate of 10%, the NPV of the project is:

A) 6.62million

B) 11.63million

C) 11.48million

D) 8.21million E)10.76 million.

Reference no: EM13622910

Questions Cloud

There are 20 questions on the test responces are ab c and : there are 20 questions on the test. responces are ab c and d. each question is 5 points and only one response is

The expected return on jk stock is 1578 percent while the : the expected return on jk stock is 15.78 percent while the expected return on the market is 11.34 percent. the stocks

A magnet at the end of the dial-o-gram balance arm the arm : a magnet at the end of the dial-o-gram balance arm. the arm has an aluminum plate in the magnetic gap. what is the

Calculate the final stress in the bar and the cylinder if : a bar of mild steel has a diameter of 75 mm and is placed inside a hollow aluminum cylinder of internal diameter 75 mm

Introducing the more efficient macine is exxpected to : 1.for a new project indigo ink inc. had lanned on depreciating new machinery that costs 300 million on a 4-year

A 180-kg cannonball is fired from a cannon with muzzle : a 18.0-kg cannonball is fired from a cannon with muzzle speed of 850msat an angle of33.0degwith the horizontal. a

The expected life of refrigerators produced by the : the expected life of refrigerators produced by the keepitcool company are normally distributed with a mean of 240

What energy must an alpha particle q 2e m 40 u and a : in a nuclear experiment a proton with kinetic energy 9.0 mev moves in a circular path in a uniform magnetic field. if

Determine the bore diameter on the seat what will the : in a direct acting pressure relief valve 64 bar pressure is acting on the conical dart seating area and the dart is

User Account

All Pages