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Nwc and the year zero incremental cash flow

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Reference no: EM131088622

1. With a tax rate of 40%, what is the impact on NI and a firm's amount of cash from an increase of $200 in COGS?

2. With a tax rate of 40%, what is the impact on NI and a firm's amount of cash from a decrease of $300 in Depreciation Expense?

3. Given the following: OCF = Minus $20; ?NWC = $10; NCS = Minus $30; Dividends = $12, Repurchase of common stock in the amount of $10. Interest expense = $5; What did this company do with its L.T. Debt during this same period?

4. Asset A will have a useful life of 12 years and cost $5M; it will have installation costs of $250,000 and a salvage or residual value of$750,000. Asset B will have a useful life of 8 years and cost $2.5M; it will have installation costs of $130,000 and a salvage or residual value of $600,000. Which asset will have the greater annual straight-line depreciation and by how much?

5. An asset is in the 7-year MACRS class. The asset costs $20M with installation costs of $3.5M. By how much would the allowable depreciation expense in year 5 differ from that in year 4?

6. For an asset in the 7-year MACRS class which costs $20M with installation costs of $3.5M, what is the book value of thia asset after 5 years?

7. Assume the following for a piece of equipment: Purchase price $30,000; 5-Yr MACRS; tax rate 40%; What would be the cash flow from salvage if the asset sold after 2 years for $15,000?

8. Assume the following for a piece of equipment: Purchase price $30,000; 5-Yr MACRS; tax rate 40%; What would be the cash flow from salvage if the asset sold after 2 years for $11,000?

9. Incremental cash flows are estimated to be in order -$7 million, $2.5 million, $4.0 million and $0.50 million. If the cost of capital is 10%, what is the NPV of this project?

10. Alpha Corporation estimates that as part of a proposed project, it would need to purchase additional $200 in inventory of raw materials and it would also need to increase its accounts payable by $75. Both of these changes would take place at the same time as the initial capital investment for the project. The year zero incremental change in NWC and the year zero incremental CASH FLOW associated with this project would be?

Reference no: EM131088622

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