Question

A new expansion project will produce operating cash flows of $90,000 a year for four years. During the life of the project, inventory will increase by $35,000 and accounts receivable will decrease by $10,000. Accounts payable will increase by $15,000, and wages payable will increase by $5,000. At the end of the project, net working capital will return to its normal level. The project requires the purchase of equipment at an initial cost of $70,000. Equipment delivery and installation costs are $10,000. The equipment will be depreciated straight-line to a zero book value over the life of the project. The equipment will be salvaged at the end of the project (year 4) creating a $30,000 before-tax cash flow. The company also owns land that will be used for the expansion. The company bought this land 5 years ago at a cost of $181,000. At the time of purchase, the company paid $14,000 to level out the land so it would be suitable for future use. Today, the land is valued at $215,000. What is the net present value of this project given a required return of 10 percent and tax rate of 34%? Show full work, including cash flow table and NPV formula.

Answer #1

Jasper Metals is considering installing a new molding machine which
is expected to produce operating cash flows of $60,000 per year for
7 years. At the beginning of the project, inventory will decrease
by $20,000, accounts receivables will increase by $23,000, and
accounts payable will increase by $16,500. At the end of the
project, net working capital will return to the level it was prior
to undertaking the new project. The initial cost of the molding
machine is $264,000. The...

A project will produce an operating cash flow of $283,000 a year
for four years. The initial cash outlay for equipment will be
$631,000. An aftertax salvage value of $42,000 for the equipment
will be received at the end of the project. The project requires
$56,000 of net working capital that will be fully recovered. What
is the net present value of the project if the required rate of
return is 16 percent?
$166,218.32
$159,009.65
$151,870.15
$143,218.96
$137,642.18

A project will produce an operating cash flow of $475,000 a year
for four years. The initial cash outlay for equipment will be
$1,080,000. The net aftertax salvage value of $81,000 will be
received at the end of the project. The project requires $142,000
of net working capital up front that will be fully recovered. What
is the net present value of the project if the required rate of
return is 14 percent?
$294,047.25
$308,116.57
$281,547.93
$317,286.90
$272,430.06

Mona-Dooley’s owns land beside its current manufacturing
facility that could be used for a proposed expansion. The company
bought this land 5 years ago at a cost of $419,000. At the time of
purchase, the company paid $44,000 to level out the land so it
would be suitable for future use. Today, the land is valued at
$595,000. The company has some unused equipment that it currently
owns valued at $30000.00. This equipment could be used for
production if $12,000...

Determine the Investment cash flow, Operating cash flow, and Net
cash flow based on the following assumptions. Initial investment of
$120,000 to purchase and install a piece of equipment for an
expansion project, 5 year straight line depreciation, $10,000 sale
of equipment at the end of five years. The new equipment will
increase pre tax revenue by $100,000 annually and increase
operating expenses by $25,000 annually. The tax rate is 30%

A project will produce an operating cash flow of $358,000 a year
for four years. The initial cash outlay for equipment will be
$785,000. The net aftertax salvage value of $42,000 will be
received at the end of the project. The project requires $78,000 of
net working capital that will be fully recovered when the project
ends. What is the net present value of the project if the required
rate of return is 14 percent?
$237,613
$251,159
$274,300
$290,184
$309,756...

A project will produce an operating cash flow of $10,000 a year
for three years. The initial cash investment in the project will be
$20,600. An additional $2,5000 of net working capital will be
required throughout the life of the project. What is the internal
rate of return for the project?
Group of answer choices
21.44%
18.43%
14.30%
30.24%
4.54%

A project will produce an operating cash flow of $385,000 a year
for three years. The initial cash outlay for equipment will be
$850,000. The net aftertax salvage value of $50,000 will be
received at the end of the project. The project requires $72,000 of
net working capital up front that will be fully recovered. What is
the net present value of the project if the required rate of return
is 14 percent?
$45,915.26
$51,208.72
$59,612.87
$54,174.86
$47,320.15

Statement of Cash Flows (Indirect method)
Particulars
Amount
Cash Flow from operating activities:
Net Income for 2019
$58,850
Adjustments:
Gain on sale of land
($8,000)
Gain on sale of long term investment
($4,000)
Depreciation
$35,500
Amortization expense
$5,000
Increase in accounts receivable
($4,550)
Increase in Dividend receivable
($1,000)
Increase in Inventories
($7,000)
Decrease in Prepaid rent
$9,000
Increase in Prepaid Insurance
($1,200)
Increase in Office Supplies
($250)
Decrease in Accounts payable
($4,000)
Increase in Income tax payable
$1,000
Increase in...

Little Abner's is expanding and expects operating cash flows of
$37,000 a year for 4 years as a result. This expansion requires
$39,000 in new fixed assets. These assets will be worthless at the
end of the project. In addition, the project requires $3,000 of net
working capital throughout the life of the project. What is the net
present value of this expansion project at a required rate of
return of 16 percent? show all work

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