What is the incremental free cash flow for year one

Assignment Help Finance Basics
Reference no: EM13282477

Your company is considering a replacement of an old delivery van with a new one that is more efficient. The old van cost $40,000 when it was purchased 5 years ago. The old van is being depreciated using the simplified straight line method over a useful life of 8 years. The old van could be sold today for $7,000. The new van has an invoice price of $80,000, and it will cost $6,000 to modify the van to carry the company products. Cost savings from use of the new van are expected to be $ 28,000 per year for 5 years. At which time the van will be sold for its estimated salvage value of $18,000. The new van will be depreciated using the simplified straight line method over its 5 year useful life. The company's tax rate is 35%. Working capital is expected to increase by $5,000 at the inception of the project, but this amount will be recaptured at the end of year five.1) What is the initial outlay required to fund this replacement project ? choices: A)73,580, B)78,600, c)81,200, D)74,500. 2)what is the incremental free cash flow for year one? A)22,305 B)18,875 C)24,220 D)19,985 Please provide explanation for your answers.

Reference no: EM13282477

Questions Cloud

Analysis of the regressions : Analysis of the Regressions - Make very specific comments and give reasons regarding any similarities or differences in the output results and which regression produces the strongest correlation coefficient result?
What is the mass of the sample of gas which was collected : A 0.200 L sample of H2 is collected over water at a temperature of 298 K. Atmospheric pressure is 99.00 kPa. Water has a vapor pressure of 23.00 Torr at this temperature. What is the mass of the sample of gas which was collected
What would be the bonds theoretical value : Calculate the following for both bonds using semiannual analysis.
What is the conclusion that can be made for linear factors : What is the conclusion that can be made for linear,square-shapedcells and frequency reuse factors C=3 and C=4 interms of theirSIR(Signal-interference ratio).
What is the incremental free cash flow for year one : what is the incremental free cash flow for year one? A)22,305 B)18,875 C)24,220 D)19,985 Please provide explanation for your answers.
Determine the energy or the power in the signal : Determine the energy or the power in the signal. x(t) = e-a*abs(t) where a > 0 and abs(t) means the absolute value of t.
Explain what is the volume of the manifold : When the stopcock between the manifold and the flask is opened, the pressure in the system is 287 torr. Assuming no temperature changes, what is the volume of the manifold
Develop an argument to be delivered to the hospital board : Develop an argument to be delivered to the hospital board about the types and capabilities system of telemedicine you might adopt. How would you explain the similarities and differences between types
Compare the processing speed of the two implementations : (a) Implement a 4-bit ripple carry adder, (b) a 4-bit carry lookahead adder, (c) compare the cost of these two implementations, and (d) compare the processing speed of these two implementations.

Reviews

Write a Review

Finance Basics Questions & Answers

  Computation of expenses and opportunity costs to pursue mba

Explain how and why you made decision to pursue a MBA. Comprise in that description computations of expenses and opportunity costs related to that decision.

  Find the risk premiums for each factor

Assume stock returns can be explained by a two-factor model information for two diversified portfolios. The risk free rate is 4%

  Compute the accounts receivable balance

Compute the accounts receivable balance before and after the change in the cash discount policy. Use the net sales (total sales minus cash discounts) to determine the average daily sales.

  What would have been the benfits of delaying investments

What would have been the benfits of delaying investments? What would have been the costs?

  What is the fee schedule for services

What is the fee schedule for these services, assuming that the goal is to cover only variable and direct fixed cost?  What is the fee schedule for these services, assuming that the goal is to cover only variable and direct fixed cost?

  Difference between simple and compound interest

What is the difference between "simple" and "compound" interest? What are some of the uses of compound interest in business?

  Explain theory about capital project projection satisfaction

Explain Theory about capital project projection satisfaction of the hurdle-rate requirements and what other criteria impact the decision

  What is the dividend payout parentage

The firm tries to maintain a 20 percent debt and 80 percent equity of its planned capital expenditures and does not plan to issue more stock. The firm estimates to earn 12 million in the next year.

  Explain the primary roles of the u.s. federal reserve

Briefly explain the primary roles of the U.S. Federal Reserve, the Federal Reserve Chairman, and the Federal Reserve Board. Indicate each party's effectiveness in today's economic environment. Provide support for your explanation.

  What were the total costs of the issue

In addition, the underwriter charges $600,000 in legal fees. On the first day of trading, the firm's stock closed at $61. What were the total costs of the issue?

  Determining money and interest rate

What major economic indicators would you examine if you were planning to make the large purchase and required a loan. Buying a new car, business equipment or house?

  What is the internal rate of return for the two investments

What is the internal rate of return for the two investments? Which investment(s) should the firm make? Is this the same answer you obtained in part A

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