Calculate the after-tax operating cash flows, Econometrics

Assignment Help:

Your firm will produce widgets for the next 10 years (starting at t=1). Annual revenue from

selling widgets is $20,000. Production requires an initial outlay (at t=0) for machinery of $50,000, and

involves annual expenses for labor and raw materials of $3,000. In addition, the operation requires the firmto hold a certain amount of inventory. It is estimated that the level of inventory required is 10% of annualsales. You will need to build up this level of inventory before you start the project (i.e., at t=0). Themachinery will last 10 years and have zero salvage value. Any remaining assets of the firm will be

liquidated at the end of the ten years. Assume that the firm uses straight-line depreciation over the life ofthe equipment, pays 40% tax, and that all cash flows occur at the end of the year.

a) Calculate the after-tax operating cash flows for this firm

b) With an 8% WACC, what is the NPV of the project? Should you undertake it?

 


Related Discussions:- Calculate the after-tax operating cash flows

Stata coursework, Discuss the descriptive statistics of total government ex...

Discuss the descriptive statistics of total government expenditures and per capita government expenditures. Plot their histograms and comment.

Homoscedasticity and heteroscedasticity, Probelm: (a) Differentiate bet...

Probelm: (a) Differentiate between homoscedasticity and heteroscedasticity. (b) Outline the reasons why the variances of disturbance term may vary. (c) Given the 3 observ

Calculate expected profit and decision tree, It was shortly before noon. Mr...

It was shortly before noon. Mr. Zhi-Long Chen, director of Overnight Delivery Operations at Capital Crab and Lobster, Inc.(CCL) in Washington DC, anxiously watched the Weather Chan

Measurement error, what are the causes,consequences and remedy of measureme...

what are the causes,consequences and remedy of measurement error?

E-views, The following table gives data on the Consumer Price Index (CPI) a...

The following table gives data on the Consumer Price Index (CPI) and the Standard & Poor (S&P) company''s index of 500 common stock prices. Year CPI Index S&P 500 Index 1978 65.2 9

T-ratio test, about t-ratio test under multicolinarity

about t-ratio test under multicolinarity

Coursework, Following the general methodology used by econometricians as ex...

Following the general methodology used by econometricians as explained in the session for week 1 (eight steps), explain how you would proceed to determine if a good complies with t

GDP, If in some country personal consumption expenditures in a specific yea...

If in some country personal consumption expenditures in a specific year are $50 billion, purchases of stocks and bonds are $30 billion, net exports are -$10 billion, government pur

Write Your Message!

Captcha
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