What are the annual after-tax cash receipts

Assignment Help Financial Management

Reference no: EM131928599

Demirjian Inc. is considering an investment project that would require an initial investment of $290,000 and that would last for 8 years. The annual cash receipts from the project would be $189,000 and the annual cash expenses would be $85,000. The equipment used in the project could be sold at the end of the project for a salvage value of $29,000. The company's tax rate is 30%. For tax purposes, the entire initial investment will be depreciated over 7 years without any reduction for salvage value. The company uses a discount rate of 13%.

1. When computing the net present value of the project, what are the annual after-tax cash receipts?

a. $56,700

b. $104,000

c. $132,300

d. $147,571

2. The net present value of the project is closest to:

a. $121,972

b. $114,339

c. $59,367

d. $67,000

Reference no: EM131928599

Questions Cloud

Determine the two possible stock prices for the next period : Determine the two possible stock prices for the next period. Find the value of the option today.

What is the variation margin : A trader buys a 90-day Eurodollar futures contract at 94.85. What is the variation margin? Assume the contract multiplier is $25/basis point.

What is the new monthly payment if couple refinances : What is the new monthly payment if the couple refinances?

Calculate the price of at the money call : If the risk-free rate of interest is 10%, calculate the price of an “at the money” call (with a strike price also of $50)?

What are the annual after-tax cash receipts : When computing the net present value of the project, what are the annual after-tax cash receipts? The net present value of the project is closest to:

Calculate the weekly values in your margin account : Calculate the weekly values in your margin account. Calculate your realized return for the entire period.

Calculate net profit on the option if kimberly clark stock : Calculate your net profit on the option if Kimberly Clark’s stock price falls to $70 and you exercise the option.

The proceeds before the banker fees are deducted : What is the cost of debt to DMI if the following are the proceeds before the banker's fees are deducted?

What is the immediate stock price reaction : What is the immediate stock price reaction? How many shares will the company purchase next year instead of paying dividends?

User Account

All Pages