Question

A project with a life of 10 has an initial fixed asset investment of $40,320, an initial NWC investment of $3,840, and an annual OCF of –$61,440. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 9 percent, what is the project's equivalent annual cost, or EAC?

• $-64,664.85

• $-57,858.03

• $-43,683.88

• $-71,471.68

• $-68,068.27

A gym owner is considering opening a location on the other side of town. The new facility will cost $1.56 million and will be depreciated on a straight-line basis over a 20-year period. The new gym is expected to generate $577,000 in annual sales. Variable costs are 40 percent of sales, the annual fixed costs are $94,100, and the tax rate is 34 percent. What is the operating cash flow?

Multiple Choice

• $345,234

• $278,620

• $192,906

• $112,234

• $244,386

Quaker State Wings has 230,000 shares outstanding and net income of $890,000. The company stock is currently selling for $83.31 per share. If the company repurchases $616,000 of its stock, what is the earnings per share after the repurchase?

Multiple Choice

• $4.06

• $4.00

• $3.87

• $4.20

• $4.12

Answer 1

1)