Project will produce operating cash flow

Assignment Help Financial Management

Reference no: EM131864971

1. A project will produce an operating cash flow of $105,000 a year for three years. The initial cash outlay for equipment will be $193,000. The net aftertax salvage value of $32,000 will be received at the end of the project. The project requires $21,000 of net working capital that will be fully recovered. What is the net present value of the project if the required rate of return is 12 percent?

$35,640.61

$41,536.72

$48,415.08

$54,320.15

$60,969.25

2. Assume a machine costs $810,000 and lasts five years before it is replaced. The operating cost is $41,400 a year. Ignore taxes. What is the equivalent annual cost if the required rate of return is 12 percent? (Hint: the EAC should account for both initial investment and annual operating costs)

$284,357.17

$266,101.88

$245,734.66

$229,570.94

$205,338.61

Reference no: EM131864971

Questions Cloud

A bond which has deferred call : A bond which has a deferred call

The firm is currently operating at full capacity : Assume all assets and current liabilities change spontaneously with sales and the firm is currently operating at full capacity.

What is tracy and brett current ratio : What is Tracy and Brett's current ratio?

What is the current book value of assets : Century Design purchased some fixed assets four years ago at a cost of $360,000. What is the current book value of these assets?

Project will produce operating cash flow : A project will produce operating cash flow of $105,000 year for three years. What is net present value of the project if the required rate of return is 12%.

Company makes wind and current gauges for pleasure planes : Aviation Gauges Company makes wind and current gauges for pleasure planes.

Evaluate the proposed acquisition of spectrometer : You have been asked by the president of your company to evaluate the proposed acquisition of a spectrometer for the firm’s R&D department.

True of risk-return trade off : Which of the following is true of risk-return trade off?

What will be the estimated after-tax operating cash flow : What will be the estimated after-tax operating cash flow in year 1 if the new isolator is purchased?

User Account

All Pages