Select the incremental cash flows from the

Reference no: EM13356884

Select the incremental cash flows from the options.

1. Which of the following cash flows are relevant incremental cash flows for a project that you are currently considering investing in?

a. The tax savings brought about by the projects depreciation expense.

b. The cost of a marketing survey you conducted to determine demand for the proposed project.

c. Interest payments on debt used to finance the project.

d. Research and Development expenditures you have made.

2. Your firm is considering building a new office complex. Your firm already owns land suitable for the new complex. The current book value of the land is $100,000, however a commercial real estate again has informed you that an outside buyer is interested in purchasing this land and would be willing to pay $650,000 for it. When calculating the NPV of your new office complex, ignoring taxes, the appropriate incremental cash flow for the use of this land is:

a. $650,000

b. $0

c. $100,000

d. $750,000

3. You are considering adding a micro brewery on to one of your firm's existing restaurants. This will entail an increase in inventory of $8,000, an increase in accounts payables of $2,500, and an increase in property, plant, and equipment of $40,000. All other accounts will remain unchanged. The change in net working capital resulting from the addition of the micro brewery is:

a. $45,500

b. $10,500

c. $6,500

d. $5,500

4. You are considering adding a micro brewery on to one of your firm's existing restaurants. This will entail an investment of $40,000 in new equipment. This equipment will be depreciated straight line over five years. If your firm's marginal corporate tax rate is 35%, then what is the value of the micro brewery's depreciation tax shield in the first year of operation?

a. $2,800

b. $14,000

c. $5,200

d. $26,000

Reference no: EM13356884

Questions Cloud

Capitalization of land building and machinery acquired : capitalization of land building and machinery acquired capitalization of installation improvement demolition of

Based on acquisition mode and market value accounting for : based on acquisition mode and market value accounting for land and other fixed assets acquired for business.1.

Forecasting revenue from sales based on projected net : forecasting revenue from sales based on projected net income and operating costs.income statement hermann industries is

Select the incremental cash flows from the : select the incremental cash flows from the options.1.nbspwhich of the following cash flows are relevant incremental

Preparation of income statement from trail balance and : preparation of income statement from trail balance and after adjustments.client still more operates a private

Income statement from incomplete info from balance sheetthe : income statement from incomplete info from balance sheet.the accounts of acme company with the increases or decreases

Preparing of single step and multi step income statements : preparing of single step and multi step income statements given the revenue and expenses account balances and tax

Valuable information or data regularly covered in the : valuable information or data regularly covered in the company.post a single page essay answering the following

User Account

All Pages