Question

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.32 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1.735 million in annual sales, with costs of $650,000. If the tax rate is 21 percent, what is the OCF for this project?

Answer #1

**Answer**

Initial Investment = $2.32 million

Salvage Value = $0

Life of the project = 3 Years

Now, Depriciation under SLM = (Initial Investment - Salvage Value)/ Life of the project

=($2.32 million - 0)/3

=$ 773333.33

Now to compute the OCF we use the below formula

Operating Cash Flow (OCF) = (Revenue - Cost - Depriciation) (1- Tax Rate) + Depriciation

We add back depriciation as it is a non cash expenditure.

Therefore OCF = ($ 1735000 - $ 650000- 773333.33) * (1-0.21) + 773333.33

=$ 1019550

**Therefore Projects operating Cash flow = $
1019550**

Quad Enterprises is considering a new three year expansion
project that requires an initial fixed asset investment of 2.32
million. The fixed asset will be depreciated straight line to zero
over its three year tax life, after which time it will be
worthless. The project estimated to generate 1.735 million in
annual sales, with costs of 650,000. The tax rate is 21 percent and
the required return on the project is 12 percent. What is the
project's NPV?

Quad Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.32
million. The fixed asset will be depreciated straight-line to zero
over its three-year tax life, after which time it will be
worthless. The project is estimated to generate $1,660,000 in
annual sales, with costs of $635,000. If the tax rate is 21
percent, what is the OCF for this project? (Do not round
intermediate calculations and enter your answer in dollars, not...

Quad Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.29
million. The fixed asset will be depreciated straight-line to zero
over its three-year tax life, after which time it will be
worthless. The project is estimated to generate $1,715,000 in
annual sales, with costs of $625,000. The tax rate is 21 percent
and the required return on the project is 10 percent. What is the
project’s NPV? (Do not round intermediate
calculations....

Quad Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.31
million. The fixed asset will be depreciated straight-line to zero
over its three-year tax life, after which time it will be
worthless. The project is estimated to generate $1,657,000 in
annual sales, with costs of $633,000. If the tax rate is 25
percent, what is the OCF for this project? (Do not round
intermediate calculations and enter your answer in dollars, not...

Quad Enterprises is considering a new 5-year expansion project
that requires an initial fixed asset investment of $3.888 million.
The fixed asset will be depreciated straight-line to zero over its
5-year tax life, after which time it will be worthless. The project
is estimated to generate $3,456,000 in annual sales, with costs of
$1382,400.
If the tax rate is 24 percent, what is the OCF for this
project?

Quad Enterprises is considering a new 2-year expansion project
that requires an initial fixed asset investment of $3.456 million.
The fixed asset will be depreciated straight-line to zero over its
2-year tax life, after which time it will be worthless. The project
is estimated to generate $3,072,000 in annual sales, with costs of
$1,228,800.
If the tax rate is 22 percent, what is the OCF for this
project?

Quad Enterprises is considering a new 2-year expansion project
that requires an initial fixed asset investment of $4.968 million.
The fixed asset will be depreciated straight-line to zero over its
2-year tax life, after which time it will be worthless. The project
is estimated to generate $4,416,000 in annual sales, with costs of
$1,766,400.
If the tax rate is 22 percent, what is the OCF for this
project?
$2,613,168
$2,482,510
$2,649,600
$2,743,826
$129,168

Quad enterprises is considering a new three year
expansion project that requires an initial fixed asset investment
of 2.32 million. The fixex assest qualifies for 100 percent bonus
depreciation in the first year.
The project is estimated to generate $1.735 million in annual sales
with costs of $650,000. The project requires an initial investment
in net working capital of $250,000 and the fixed asset will have a
market value of $180,000 at the end of the project. The tax rate...

Quad Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.29
million. The fixed asset will be depreciated straight-line to zero
over its three-year tax life, after which time it will be
worthless. The project is estimated to generate $1,810,000 in
annual sales, with costs of $720,000. The tax rate is 25 percent
and the required return on the project is 13 percent. What is the
project’s NPV?

Quad Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.18
million. The fixed asset will be depreciated straight-line to zero
over its three-year tax life, after which time it will be
worthless. The project is estimated to generate $1,730,000 in
annual sales, with costs of $640,000. The tax rate is 24 percent
and the required return on the project is 13 percent. What is the
project’s NPV?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 24 minutes ago

asked 24 minutes ago

asked 29 minutes ago

asked 37 minutes ago

asked 53 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago