What are the operating cash flows in year

Assignment Help Business Economics
Reference no: EM133067823

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. (Round to the nearest dollar.)

Reference no: EM133067823

Questions Cloud

How much overhead will be applied to each unit of Product A : They have calculated their POHR to be $27 per DLH. Direct labor cost is $30 per hour. How much overhead will be applied to each unit of Product A
Explain the projects based on the irr : The net cash flows for two projects, A and B, are as follows:
Calculate the unit product costs for these two products : During the year, the company expected to produce 10,000 sweatshirts and 55,000 t-shirts. Calculate the unit product costs for these two products
Acceptance of high-risk project : You are the manager of a financially distressed company with $3.1 million in debt outstanding that will mature in three months.
What are the operating cash flows in year : 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. (Round to the near
What is the free cash flow in the terminal year : What is the free cash flow in the terminal year (three years after replacement)? (Round your answer to the nearest dollar.)
What is the ratio of growth capex : What is the ratio of growth CAPEX to the change in sales for The Lone Star Brewing Co. in Year 3?
Style guide and navigation structure : A design document consists of various elements including a style guide and navigation structure.
Evaluating a project that involves an investment : ABC inc is evaluating a project that involves an investment of $15 million in fixed plant and equipment. The firm expects to spend the money on fixed assets in

Reviews

Write a Review

Business Economics Questions & Answers

  What is the standard deviation of this investment

Your investment has a 5% chance of earning a 48% return, a 25% chance of earning a 17% rate of return, a 35% chance of earning an 9% rate of return, a 25% chance of losing 14%,and a 10% chance of losing 33%. What is the standard deviation of this inv..

  Concept of marginality and diminishing marginality

Describe the concept of marginality and diminishing marginality.

  Claims for unemployment

Suppose that only data on in action were published but not on claims for unemployment. What would be a reaction of the USD/EUR in that case.

  Time is worth

Your car gets 9.5L/100 km at 90 km per hour (kph) and 11.5 L/100 km at 110 kph. At what speed should you make an 800 km trip: a.) If gas cost $0.90 per litre and your time is worth $18/hour? b.) If gas costs $1.00 per litre and your time is worth $12..

  Apply basic economic principle to today healthcare market

Apply basic economic principle to today's healthcare market. Explain the role of healthcare consumers and providers in relationship to supply and demand

  Price elasticity for firm product is constant with value

Suppose an econometrician determines that the price elasticity for a firm's product is constant with value (q) = 3 for all sales levels q. If the firm's marginal cost is $4, then what price should it set?

  Display all the necessary information about the product

Assume that you have an app on your smart phone that allows you to walk up to any item in the supermarket, have your phone recognize it, and then display all the necessary information about the product. Imagine that the app even tells you where and h..

  Park land for one of two alternative recreation projects

A county is considering using a piece of park land for one of two alternative recreation projects. Project A would require construction costs of $2 million (year 0) and generate net benefits of $1 million per year for 10 years. If these figures are i..

  Role of finance and economics

- Finally, what are your arguments for and against the regulation of the financial industry?

  Price level is completely fixed in the short run

An economy is operating with output $400 billion below its natural level, and fiscal policymakers want to close this recessionary gap. The central bank agrees to adjust the money supply to hold the interest rate constant, so there is no crowding out.

  Two kinds of people in society who are equally represented

Suppose there are two kinds of people in society who are equally represented —those with 20% chance of developing diabetes next year, and those with 2% chance of developing diabetes next year. Please explain the difficulty you face as an insurer in f..

  How much money should you put in a savings account

If you want to have $301,301 in 19 years, how much money should you put in a savings account today? Assume that the savings account pays you 6.99 percent, compounded monthly. Cooling Tools, Inc. is currently producing 671 of small refrigerators per m..

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