What are the operating cash flows in year 1

Assignment Help Finance Basics
Reference no: EM133074205

Mike Mulligan Excavation Inc. is considering the purchase of a new Caterpillar 345DL Hydraulic Excavator. The machine will be used for two years to excavate building foundations. The cost of the machine is $300,000 and it can be sold for $100,000 at the end of two years. Mike estimates that, with the new machine, he can dig 35 foundations per year with an average invoice price of $10,000. Mike estimates that his incremental costs will be $150,000 per year (for wages, fuel, and maintenance). The company's cost of capital is 9% and the marginal tax rate is 35%. What are the operating cash flows in Year 1? Assume that the cost of buying the new excavator is tax deductible at the end of the first year.

Reference no: EM133074205

Questions Cloud

What is the cost of equity after recapitalization : Cede & Co. expects its EBIT to be $55,000 every year forever. The firm can borrow at 7 percent. The firm currently has no debt, its cost of equity is 11 percent
What is the complete diagnostic plan : What is the complete diagnostic plan and rational and the pertinent positives and negatives supporting diagnoses
Calculate the net sales revenue for the transaction : 8 Mar 2019 Sold 40 units with 10% trade discount and credit term 2/7 Net 14. Calculate the Net Sales Revenue for the transaction on 8 March 2019
What is the covariance between the returns : Greta, an elderly investor, has a degree of risk aversion of A =4when applied to return on wealth over a one-year horizon. She is pondering two portfolios, the
What are the operating cash flows in year 1 : What are the operating cash flows in Year 1? Assume that the cost of buying the new excavator is tax deductible at the end of the first year.
Strategic development : How does your educational organization develop strategic objectives and action plans? How are these strategic objectives and action plans implemented
What are the terminal year cash flows : The Rumpel Company purchased a felt press last year at a cost of $7,500. The machine has worn out quickly and is slowing production. It could be sold today for
Personnel decision making : Personnel decision making if you see fit, but don't go too far afield addressing how you would select and retain a housewife and homemaker
Describe ethical dilemma for disclosing legal liabilities : Describe the ethical dilemma for disclosing legal liabilities, and the options for accountants. Does this change culture to culture

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd