User Account

All Pages

What is the year-0 net cash flow

Assignment Help Finance Basics
Reference no: EM132747287

New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $850,000, and it would cost another $24,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $610,000. The MACRS rates for the first three years are 0.3333, 0.4445, and 0.1481. The machine would require an increase in net working capital (inventory) of $19,000. The sprayer would not change revenues, but it is expected to save the firm $337,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 25%. (Ignore the half-year convention for the straight-line method.) Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar.

A. What is the Year-0 net cash flow?

B. What are the net operating cash flows in Years 1, 2, and 3?

Year 1: $

Year 2: $

Year 3: $

C. What is the additional Year-3 cash flow (i.e, the after-tax salvage and the return of working capital)?

D. If the project's cost of capital is 13%, what is the NPV of the project?

E. Should the machine be purchased? Yes or No

Reference no: EM132747287

Questions Cloud

Most common ways to collaborate in your organization : What are the current, most common ways to collaborate in your organization?
What annual rate have sales been growing : Sales were €6 million 5 years earlier (in 2012). To the nearest percentage point, at what annual rate have sales been growing?
Calculate the equivalent annual annuity for project : The ABC Company is considering the purchase of the new equipment. It can buy either equipment A or equipment B, so the investment projects
Which is a mistake that management often make : Which is a mistake that management and HR departments often make that contributes to work dissatisfaction? Giving realistic job previews
What is the year-0 net cash flow : A. What is the Year-0 net cash flow? B. What are the net operating cash flows in Years 1, 2, and 3?
Determine risk and resource management strategies : Determine risk and resource management strategies for project management. Propose a plan for the completion of an IT project.
Which can help hr to discourage unions from forming : Which can help HR to discourage unions from forming (legally)? Which Collective bargaining includes all of the following except?
Adjust the company income statement to a cash basis : Joyner Company's income statement for Year 2 follows: adjust the company's income statement to a cash basis for Year 2
Describe the common stock : After developing a fundamental understating of stocks (i.e., what they represent, how they are obtained, etc.), a prudent investor could focus on improving

Reviews

Write a Review

Finance Basics Questions & Answers

  Staffing plan for a growing business

Specify three (3) tasks that you need to perform to identify, analyze, and develop job requirements and task statements.

  How many shares of stock must be sold

The underwriters charge a 7.8 percent spread, the administrative costs are $411,000, and the offer price is $35 per share. How many shares of stock must be sold if the firm is to raise the funds it desires?

  What other investment package produce identical cash flow

Companies A and B differ only in their capital structure. A is financed 30% debt and 70% equity; B is financed 10% debt and 90% equity. The debt of both companies is risk-free.

  Compute the expected returns of the three assets

Use yahoo finance to get the monthly adjusted closing prices and compute the expected returns of the three assets, the standard deviations of the three assets

  What are numerical value of the profits for st equal to zero

Draw a graph showing the profits from the two-option portfolio as a function of the underlying asset's price. What are the numerical values of the profits for ST = 0 and ST = X?

  5 key elements that must be considered

Effective marketing objectives have 5 key elements that must be considered, what are they?

  What is sustainable growth rate

If the Crash Davis Driving School has an ROE of 16.8 percent and a payout ratio of 20 percent, what is its sustainable growth rate?

  What is the npv of the project

The machine will produce 2,300 soufflés per year, with each costing $2.70 to make and priced at $5.55.

  What is the value today of money machine

What is the value today of money machine that will pay $4,909 per year for 24 years?

  Which statements about listing on stock exchange is correct

Which of the following statements about listing on a stock exchange is most CORRECT? Which of the following is generally NOT true and an advantage of going public

  Balance sheet items under fixed assets

Classify the following balance sheet items under fixed assets, working capital, shareholders

  Discuss about approximation of financial markets

In developing financial models, the assumption often is made that all investors are rational and well-informed and have the same expectations about the future.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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