What is the annual operating cash flow

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1. ABC Inc. is considering an investment of $1,564 million with after-tax cash inflows of $408 million per year for six years and an additional after-tax salvage value of 24 million in Year 6. The required rate of return is 9%. What is the investment's Profitability Index (PI)?

2. Suppose the nominal rate is 16.14% and the inflation rate is 4.41%. Solve for the real rate. Use the Fisher Effect formula.

3. A 12-year project is expected to generate annual sales of $213,297, variable costs of $47,187, and fixed costs of $32,665. The annual depreciation is $11,269 and the tax rate is 34 percent. What is the annual operating cash flow? 

4. Based on the following information, what is the portfolio beta?

Stock

Value

Beta

A

$27,723

2.56

B

$23,175

1.92

C

$7,266

0.47

D

$29,264

2.1

5. ABC Company is considering an investment that will cost the company $560 at time=0. The after-tax cash flows are expected to be $83 each year for 13 years. What is the payback period?

Reference no: EM131387754

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