Question

the difference between a firm's future cash flow if it accepts a project and the firm's future cash flows if it does not accept the project is referred to as the project's

Answer #1

**Incremental
cash flows:**

The meaning of incremental cash flows is that the cash flows of a project increases upon the acceptance of a particular project. If upon acceptance of a project, the cost of goods sold decreases, then this additional cash flow is an incremental cash flow. A decrease in the networking capital is an incremental cash flow.

So, the difference between the future cash flow, if it accepts and the cash flows if it does not accept a project is called the incremental cash flows.

Mega Dynamics is considering a project that has the following
cash flows:
Year
Project Cash Flow
0
?
1
$2,000
2
3,000
3
3,000
4
1,500
The project has an IRR of 17% . The firm's cost of capital is 11
percent. What is the project's net present value (NPV)?

Shannon industries is considering a project that has the
following cash flows:
Year Project cash flow
0 $-6,240
1 $1,980
2 $3,750
3 ?
4 $1,000
The project has a payback of 2.85 years.
The firm's cost of capital is 10 percent. what is the project's
net present value (NPV)?
a) 874.87
b) -146.92
c) 436.96
d) 727.95
e) -207.02

Consider a project that costs $5000 and has an expected future
cash flow of $1000 per year forever.
If we wait one year, the cost will increase to $6000 and the
expected future cash flow will increase to $1200.
If the required return is 10%, should we accept the project?
If we should, when should we start the project and why
please shows steps please.

PROJECT CASH FLOW
Colsen Communications is trying to estimate the first-year cash
flow (at Year 1) for a proposed project. The financial staff has
collected the following information on the project:
Sales revenues
$5 million
Operating costs (excluding depreciation)
3.5 million
Depreciation
1 million
Interest expense
1 million
The company has a 40% tax rate, and its WACC is 13%.
Write out your answers completely. For example, 13 million
should be entered as 13,000,000.
What is the project's cash flow...

PROJECT CASH FLOW
Colsen Communications is trying to estimate the first-year cash
flow (at Year 1) for a proposed project. The financial staff has
collected the following information on the project:
Sales revenues
$5 million
Operating costs (excluding depreciation)
3.5 million
Depreciation
1 million
Interest expense
1 million
The company has a 40% tax rate, and its WACC is 12%.
Write out your answers completely. For example, 13 million
should be entered as 13,000,000.
What is the project's cash flow...

Profitability index.Given the discount rate and
the future cash flow of each project listed in the following
table, use the PI to determine which projects the company should
accept.
Cash Flow
Project A
Project B
Year 0
−$2,000,000
−$2,600,000
Year 1
$400,000
$1,300,000
Year 2
$550,000
$1,150,000
Year 3
$700,000
$1,000,000
Year 4
$850,000
$850,000
Year 5
$1,000,000
$700,000
Discount rate
6%
14%
What is the PI of project A?

PROJECT CASH FLOW Colsen Communications is trying to estimate
the first-year cash flow (at Year 1) for a proposed project. The
financial staff has collected the following information on the
project: Sales revenues $25 million Operating costs (excluding
depreciation) 17.5 million Depreciation 5 million Interest expense
5 million The company has a 40% tax rate, and its WACC is 11%.
Write out your answers completely. For example, 13 million should
be entered as 13,000,000.
A.
What is the project's cash...

Gio's Restaurants is considering a project with the following
expected cash? flows:
Year
Project Cash Flow? (millions)
0
?$(210?)
1
100
2
72
3
100
4
90
If the? project's
appropriate discount rate is
11percent, what is
the? project's discounted payback? period?
The? project's discounted payback period is ____
years? Round to 2 decimal places

Profitability index. Given the discount rate and the future cash
flow of each project listed in the following table, use the PI to
determine which projects the company should accept.
What is the PI of project A?
What is the PI of Project B?
Cash Flow
Project A
Project B
Year 0
−$2,000,000
−$2,300,000
Year 1
$600,000
$1,150,000
Year 2
$700,000
$1,050,000
Year 3
$800,000
$950,000
Year 4
$900,000
$850,000
Year 5
$1,000,000
$750,000
Discount rate
5%
16%

What are free cash flows? Explain the difference between the
company’s operating cash flow and it’s free cash flow.
Describe the key features of the free cash flow approach to
valuation.

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