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What is the expected cash flow for year one

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Reference no: EM131933915

1. The West Corp. has an investment project that will save the company $15,000 per year for 3 years. The project's cost is $20,000. If the depreciation on the new investment is $6,600 the first year and the company's tax rate is 34%, what is the expected cash flow for year one?

A. $6,800 B. $5,100 C. $12,144 D. $16,667

2. Drummond Corporation is considering making an investment in Project A, which will require an initial cash outlay of $20,000. Project A is expected to generate cash inflows of $6,000 for year 1, $8,000 for year 2, $10,000 for year 3, and $7,000 for year 4. The firm's hurdle rate is 12%.What is the payback period for Project A?

A. 1.9 years B. 2.6 years C. 3.2 years D. 4.0 years

Reference no: EM131933915

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