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You are evaluating a project for your company. Equipment for the project has a cost of $250,000. there will also be a delivery expense of $35,000 and installation expenses of $65,000. This equipment will be depreciated as a 7 year asset under MACRS. It is expected to have a salvage value of $30,000. At the end of the project's life, the equipment will be sold for it's salvage value. In addition, a net working capital investment of $100,000 will be made. At the end of the projects life, this net working capital will be allowed to 'cash out'. this project is expected to generate $150,000 each year. the cash operating expenses will be $50,000 each year. In addition additional net working capital of $10,000 will be invested during each year of the project's life. At the end of the project this net working capital will also be returned to cash. Assume that the company's required rate of return is 14% and that the marginal tax rate is 40%
a. What are the Free Cash Flows each year for the Project?
Above is the problem that I am working on, I am confused as to how to set up an income statment or where to even begin on this problem. I will be working this problem on excel.
You have just been offered a job. You have the choice of two different salary arrangements. You can have 55,000 per year for the next two years, payable at the end of each year; or you can have 40,000 per year for the next two years, payable at the e..
You have a two children, A and B. Child A is not going to college but is working in a business to learn the ropes. Child A plans on opening a business someday. Child B is attending college. You put a certain amount of money into an account.
What are the losses for each tranche given in the table of scenarios below?
Explain the communication process that applies to advertising and promotion and explain the organisation of the advertising and promotions industry
It is common industry knowledge that an audit plan provides the specific guidelines auditors must follow when conducting an external audit. External public accounting firms conduct external audits to ensure outside stakeholders that the company's fin..
Dweller, Inc. is considering a four-year project that has an initial after-tax outlay or after-tax cost of $110,000. The future cash inflows from its project are $30,000, $25,000, $50,000 and $40,000 for years 1, 2, 3 and 4, respectively. Dweller use..
Looking at a list of beta coefficients you spot a number of stocks as possible buys for your new stock portfolio. You have $80,000 to invest. You have decided to have just three stocks in your portfolio (this will make it easier to follow than a port..
suppose that a manufacturer is going to produce a part which is a component of a number of his assembled products. the
Olympic Sports has two issues of debt outstanding. One is a 9% coupon bond with a face value of $32 million, a maturity of 15 years, and a yield to maturity of 10%. The coupons are paid annually. What is the before-tax cost of debt for Olympic? What ..
You have been asked to value a company using the FCF method. The free cash flow last year for the company was $20 million. Free cash flow for next year expected to be -$20 million. You have been asked to value the horizon value (continuing value) two..
The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking up." As a result, the cemetery project will provide a net cash inflow of $90,000 for the firm during the first year, and th..
Suppose you take out a 30 year mortgage for $ 275000 at 4.75% interest. The monthly payments on this loan are $ 1434.53. If you pay an extra 40% per month on your mortgage, how soon will you pay off the loan?
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