Question

King Nothing is evaluating a new 6-year project that will have annual sales of $425,000 and costs of $293,000. The project will require fixed assets of $525,000, which will be depreciated on a 5-year MACRS schedule. The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, 11.52 percent, and 5.76 percent, respectively. The company has a tax rate of 35 percent. What is the operating cash flow for Year 3?

Answer #1

A company is considering a new 6-year project that will have
annual sales of $207,000 and costs of $128,000. The project will
require fixed assets of $247,000, which will be depreciated on a
5-year MACRS schedule. The annual depreciation percentages are
20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, 11.52
percent, and 5.76 percent, respectively. The company has a tax rate
of 34 percent. What is the operating cash flow for Year 2?

A company is considering a new 6-year project that will have
annual sales of $198,000 and costs of $122,000. The project will
require fixed assets of $241,000, which will be depreciated on a
5-year MACRS schedule. The annual depreciation percentages are
20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, 11.52
percent, and 5.76 percent, respectively. The company has a tax rate
of 34 percent. What is the operating cash flow for Year 2?
Multiple Choice
$65,892
$63,817
$76,381
$52,061
$59,599

Pear Orchards is evaluating a new project that will require
equipment of $227,000. The equipment will be depreciated on a
5-year MACRS schedule. The annual depreciation percentages are
20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and
11.52 percent, respectively. The company plans to shut down the
project after 4 years. At that time, the equipment could be sold
for $52,800. However, the company plans to keep the equipment for a
different project in another state. The tax rate is...

Brummitt Corp., is evaluating a new 4-year project. The
equipment necessary for the project will cost $2,800,000 and can be
sold for $313,000 at the end of the project. The asset is in the
5-year MACRS class. The depreciation percentage each year is 20.00
percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52
percent, respectively. The company's tax rate is 35 percent. What
is the aftertax salvage value of the equipment?

A company is evaluating a new 4-year project. The equipment
necessary for the project will cost $3,800,000 and can be sold for
$745,000 at the end of the project. The asset is in the 5-year
MACRS class. The depreciation percentage each year is 20.00
percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52
percent, respectively. The company's tax rate is 34 percent. What
is the aftertax salvage value of the equipment?

Bad co. has a new 4-year project that will have annual sales of
7,700 units. The price per unit is $19.20 and the variable cost per
unit is $6.95. The project will require fixed assets of $87,000,
which will be depreciated on a 3-year MACRS schedule. The annual
depreciation percentages are 33.33 percent, 44.45 percent, 14.81
percent, and 7.41 percent, respectively. Incremental overhead costs
debited to this project are $27,000 per year and the tax rate is 40
percent. What...

Phil's Diner purchased some new equipment two years ago for
$102,274. Today, it is selling this equipment for $81,604. What is
the after-tax cash flow from this sale (in $) if the tax rate is 35
percent? The equipment falls in 5-year MACRS class. The MACRS
allowance percentages are as follows, commencing with year 1:
20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.

Bad Company has a new 4-year project that will have annual sales
of 9,200 units. The price per unit is $20.70 and the variable cost
per unit is $8.45. The project will require fixed assets of
$102,000, which will be depreciated on a 3-year MACRS schedule. The
annual depreciation percentages are 33.33 percent, 44.45 percent,
14.81 percent, and 7.41 percent, respectively. Fixed costs are
$42,000 per year and the tax rate is 40 percent. What is the
operating cash flow...

Horn Company is evaluating an investment project that has a 6-year life
and produces the following cash inflows:
Years 1 - 4 ............. $20,000 (each year)
Year 5 .................. $30,000
Year 6 .................. ???????
The initial investment for this project is $98,320 and the net present
value of this project was calculated to be $5,057 at a cost of capital
of 5%.
Calculate the amount of the year 6 cash inflow associated with this
investment project. Ignore the effects of...

Phil's Diner purchased some new equipment two years ago for
$118,679. Today, it is selling this equipment for $80,947. What is
the after-tax cash flow from this sale (in $) if the tax rate is 28
percent? The equipment falls in 5-year MACRS class. The MACRS
allowance percentages are as follows, commencing with year 1:
20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.

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