Question

A firm is considering a replacement project which requires the initial outlay of $300,000 which includes both an after-tax salvage from the old asset of $12,000 and an additional working capital investment of $8,000. The 12-year project is expected to generate annual incremental cash flows of $54,000 and have an expected terminal value at the end of the project of $20,000. The cost of capital is 15 percent, and its marginal tax rate is 40 percent. Calculate the net present value of this project.

Answer #1

Solution.>

*Note: Give it a thumbs up if it helps! Thanks in
advance!*

16 A firm is considering a replacement project which requires
the initial outlay of $300,000 w-hich includes both an after-tax
salvage from the old asset of $12,000 and an additional working
capital investment of $8,000. The 12-year project is expected to
generate annual incremental cash flows of $54,000 and have an
expected terminal value at the end of the project of $20,000. The
cost of capital is 15 percent, and its marginal tax rate is 40
percent. Calculate the net...

A company s considering a project which requires the initial
outlay of $300,000 which includes both an after-tax salvage from
the old asset of $12,000 and an additional working capital
investment of $8,000. The 12-year project is expected to generate
annual incremental cash flows of $54,000 and have an expected
terminal value at the end of the project of $20,000. The cost of
capital is 15 percent, and the company's marginal tax rate is 40
percent. Calculate the net present...

You are evaluating a capital budgeting replacement project with
a net investment of $85,000, which includes both an after-tax
salvage from the old asset of $5,000 and an additional working
capital investment of $10,000. The expected annual incremental cash
flows after-tax is $14,000. The project has a life of 9 years with
an expected terminal value at the end of the project of $13,000.
The cost of capital of the firm is 10 percent and the firm’s
marginal tax rate...

Commercial Hydronics Incorporation is considering an asset
replacement project of replacing a control device. This old control
device has been fully depreciated but can be sold for $5,000. The
new control device, which is more automated, will cost $22,000. The
new device’s installation and shipping costs will total $12,000.
The new device will be depreciated on a straight-line basis over
its 2-year economic life to an estimated salvage value of $0. The
actual salvage value of this device at the...

3. What is the IRR of a project which requires an initial cash
outlay of $12,345, and is expected to generate after-tax cash flows
of $3,600 a year for three years and then $4,200 a year for two
more? years?
a. 14.00%
b. 15.50%
c. 16.20%
d. 17.80%

A company invests in a new project that requires an initial
capital outlay of $835087. The project will generate annual net
cash flows of $196478 over a period of 9 years. The after-tax cost
of capital is 10%. In addition, a working capital outlay of $55156
will be required. This working capital outlay will be recovered at
the end of the project’s life.
What is the net present value of the project?
Select one:
a. $264670
b. $296434
c. $933215...

The Aubergine Corporation is considering investing in a project
that requires an initial outlay of $400,000 and has a profitability
index of 1.5. It is expected to generate equal annual cash flows
over the next 12 years. The required return for this project is
20%. The NPV of this project is:

You are evaluating a capital project with a Net Investment of
$400,000, which includes an increase in net working capital of
$16,000. The project has a life of 12 years with an expected
salvage value of $3,000. The project will be depreciated via
simplified straight-line depreciation. Revenues are expected to
increase by $90,000 per year and operating expenses by $8,000 per
year. The firm's marginal tax rate is 40 percent and the cost of
capital for this project is 15%....

You are evaluating a capital project with a Net Investment of
$800,000, which includes an increase in net working capital of
$8,000. The project has a life of 20 years with an expected salvage
value of $100,000. The project will be depreciated via simplified
straight-line depreciation. Revenues are expected to increase by
$120,000 per year and operating expenses by $14,000 per year. The
firm's marginal tax rate is 40 percent and the cost of capital for
this project is 12%....

You are evaluating a capital project with a Net Investment of
$400,000, which includes an increase in net working capital of
$16,000. The project has a life of 12 years with an expected
salvage value of $3,000. The project will be depreciated via
simplified straight-line depreciation. Revenues are expected to
increase by $90,000 per year and operating expenses by $8,000 per
year. The firm's marginal tax rate is 40 percent and the cost of
capital for this project is 15%....

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 27 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago

asked 3 hours ago

asked 4 hours ago

asked 4 hours ago

asked 4 hours ago

asked 4 hours ago