Reference no: EM13492189
1.Your firm is considering a project that would require purchasing $7.5 million worth of new equipment. Determine the present value of the depreciation tax shield associated with this equipment if the firm’s tax rate is 40%, the appropriate cost of capital is 8%, and the equipment can be depreciated
a. Straight-line over a 10-year period, with the first deduction starting in one year.
b. Straight-line over a five-year period, with the first deduction starting in one year.
c. Using MACRS depreciation with a five-year recovery period and starting immediately.
d. Fully as an immediate deduction.
2.Arnold Inc. is considering a proposal to manufacture high-end protein bars used as food supplements by body builders. The project requires use of an existing warehouse, which the firm acquired three years ago for $1m and which it currently rents out for $120,000. Rental rates are not expected to change going forward. In addition to using the warehouse, the project requires an up-front investment into machines and other equipment of $1.4m. This investment can be fully depreciated straight-line over the next 10 years for tax purposes. However, Arnold Inc. expects to terminate the project at the end of eight years and to sell the machines and equipment for $500,000. Finally, the project requires an initial investment into net working capital equal to 10% of predicted first-year sales. Subsequently, net working capital is 10% of the predicted sales over the following year. Sales of protein bars are expected to be $4.8m in the first year and to stay constant for eight years. Total manufacturing costs and operating expenses (excluding depreciation) are 80% of sales, and profits are taxed at 30%.
a. What are the free cash flows of the project?
b. If the cost of capital is 15%, what is the NPV of the project?
|
Determine the current in the solenoid
: A long solenoid has 140 turns/cm and carries current i. An electron moves within the solenoid in a circle of radius 2.60 cm perpendicular to the solenoid axis. Find the current i in the solenoid
|
|
Explain elemental analysis of a compound containing h and b
: Elemental analysis of a compound containing H, B and O gave 1.3% H and 27.5% B. The molecular weight of the compound is 157.3. What is the molecular formula of the compound. a. H3B5O6 b. H2B4O7 c. H2B5O9 d. H2B4O8
|
|
Find additional resistance should be added in series
: A power supply has an open-circuit voltage of 35.0 V and an internal resistance of 2.00 O. What additional resistance should be added in series
|
|
Explain how many moles of oxygen were used in the combustion
: How many moles of oxygen were used in the combustion of solid naphthalene, C 10 H 8 , if 51 kJ of energy were released to the surroundings
|
|
What are the free cash flows of the project
: Your firm is considering a project that would require purchasing $7.5 million worth of new equipment. Determine the present value of the depreciation tax shield associated with this equipment if the firm’s tax rate is 40%, the appropriate cost of cap..
|
|
Define logistics and supply chain
: Conducted and reviewed primary and secondary market research for new product development and worked closely with Brand Managers to identify each product lines message, identity, and share end-user feedback on new and existing products along with..
|
|
Explain how many moles of nonane (c9h20) and oxygen
: How many moles of nonane (C9H20) and oxygen are required to produce 13.5 moles of carbon dioxide and 15 moles of water by complete combustion? a. 1 mole of nonane and 14 moles of oxygen
|
|
Explain how many moles of nonane and oxygen
: How many moles of nonane (C9H20) and oxygen are required to produce 13.5 moles of carbon dioxide and 15 moles of water by complete combustion
|
|
Find over what period of time did the flux increase
: When the magnetic flux through a single loop of wire increases by 30 Tm^2, an average current of 40 A is induced in the wire. over what period of time did the flux increase
|