Question

Use the following information for the next 2 questions:

Santa wants to upgrade his sleigh to a newer model. Tax rate is 21%.

• The new sleigh would cost $200,000 with $20,000 annual depreciation and could help him increase gift sales to $80,000 with $30,000 expenses.
• The old sleigh was purchased 9 years ago at $240,000 total cost with $16,000 annual depreciation. It brought in on average $60,000 sales with $27,000 expenses.

52) How much is the OCF under the new sleigh?

Question options:

	$17,000
	$23,700
	$43,700
	$30,000

How much is the incremental operating cash flow from upgrading the sleigh?

Questionoptions:

	$16,140
	$14,270
	$13,000
	-$5,730

What is the IRR of a sled investment that requires $30,000 initial cost and could produce $8,000; $10,000; $7,000; $9000 cash flows for the next 4 years respectively?

Question options:

	8.33%
	3.82%
	9.17%
	5.20%

Answer 1