Question

Draw a 5-year cash flow diagram representing the following cash flows to build springs: (Chapter 2) a. Initial investment in plant and equipment $50K b. Annual maintenance: $3K after year 1 and increasing $1K per year after that c. Annual production costs – $10K/year d. Annual revenue - $25K/year

Answer #1

Cash Flow table

investment | Annual Revenue | Annual Maint. Cost | Annual Production Cost | |

0 | -50,000.00 | |||

1 | 25,000.00 | -3,000.00 | -10,000.00 | |

2 | 25,000.00 | -4,000.00 | -10,000.00 | |

3 | 25,000.00 | -5,000.00 | -10,000.00 | |

4 | 25,000.00 | -6,000.00 | -10,000.00 | |

5 | 25,000.00 | -7,000.00 |
-10,000.00 |

Cash Flow diagram

Show your complete solution. Draw the cash-flow
diagram of the
following problem.
The maintenance cost of a certain equipment is ₱
32,000 per year for the
first five years, ₱ 45,000 per year for the next five years and ₱
15,000 at the
end of the 4th year and 6th year. Find the equivalent uniform
annual cost
of maintenance if money is worth 10% compounded annually.

If an investment project is described by the sequence of cash
flows:
Year
Cash flow
0
-300
1
-900
2
1100
3
500
Calculate the MIRR, we will assume a finance rate of 8% and a
reinvestment rate of 10% [5]
Find the IRR (using 7%, 10%, 11%) of an investment having
initial cash outflow of $3,000. The cash inflows during the first,
second, third and fourth years are expected to be $700, $800, $900
and $1,200 respectively
[5]...

1. Newex, Inc. has a capital investment opportunity with the
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Year cash flow
0 (100,000)
1 45,000
2 35,000
3 30,000
4 20,000
Which of the following is closest to the project’s payback
period?
a) 4 years
b) 2 years
c) 3.7 years
d) 3.5 years
e) 2.7 years
2. Zoomit Corporation has a capital investment opportunity that
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1.
What is the payback period for the following set of cash
flows?
Year
Cash Flow
0
−$ 8,000
1
2,800
2
1,000
3
2,900
4
2,100
Multiple Choice
3.57 years
3.80 years
3.64 years
3.92 years
3.62 years
2.
An investment project provides cash inflows of $650 per year
for 8 years.
a. What is the project payback period if the
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b. What is the project payback period if...

use tables and cash flow diagram: Gesky Industrial
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equipment, kilns, and fuel cells. The company borrowed $18,000,000
for a plant expansion and repaid the loan in seven annual payments
of $3,576,420, with the fi rst payment made 1 year after the
company received the money. What was the interest rate on the loan?
Use hand and spreadsheet solutions.

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Economic life: 3 years
Salvage value: $4,000
Initial investment in net working capital: $2,000
Revenue: $13,000 in year 1, with a nominal growth rate of 6% per
year
Fixed cost: $3,000 in year 1
Variable cost: 30% of revenue
Corporate tax rate (T): 40%...

You are considering the following project. What is the expected
cash flow for the last year (year 3)? This cash flow includes
operating cash flow and terminal cash flow. Project life: 3 years
Equipment: Cost: $20,000 Economic life: 3 years Salvage value:
$4,000 Initial investment in net working capital: $2,000 Revenue:
$13,000 in year 1, with a nominal growth rate of 6% per year Fixed
cost: $3,000 in year 1 Variable cost: 30% of revenue Corporate tax
rate (T): 40%...

(Calculating project cash flows and NPV) You are considering
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project is expected to shut down with solar-powered skateboards
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Consider the following cash flows:
Year
Cash Flow
2
$
21,200
3
39,200
5
57,200
Assume an interest rate of 8 percent per year.
If today is Year 0, what is the future value of the cash flows five
years from now? (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)
Future value
$
If today is Year 0, what is the future value of the cash flows ten
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1. Calculating project cash flows: Why do we use forecasted
incremental after-tax
free cash flows instead of forecasted accounting earnings in
estimating the NPV of a
project?
2. The FCF calculation: How do we calculate incremental
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adjustment items?
3. The FCF calculation: How do we adjust for depreciation when
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incremental after-tax free cash flow from EBITDA? What is the
intuition for the
adjustment?
4....

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