Question

You are a project manager. You are estimating the cash flows of a potential project that requires an investment of $200,000, including installation cost, and $30,000 in working capital, which will be fully recaptured at the end of the project. The machine has an estimated life of six years and will be depreciated via the simplified straight-line method. The project is expected to raise the firm’s annual revenues by $330,000 and increase annual costs by $125,000. The machine you purchase for the project can be sold for $40,000 in six years. The firm has a marginal tax rate of 40%. What is the terminal value of the project?

Answer #1

You are a project manager. You are estimating the cash flows of
a potential project that requires an investment of $200,000,
including installation cost, and $30,000 in working capital, which
will be fully recaptured at the end of the project. The machine has
an estimated life of six years and will be depreciated via the
simplified straight-line method. The project is expected to raise
the firm’s annual revenues by $330,000 and increase annual costs by
$125,000. The machine you purchase...

You are a project manager. You are estimating cash flows of a
potential project that requires investment of 400,000in a machine,
including installation cost, and $60,000 in working capital which
will be fully captures at the end of the project. The machine has
the estimated life of 7 years and will be depreciated vie
simplified straight-line method. The project is expected to raise
the firm's revenues by $330,000 and costs by $125,000 annually. the
machine you purchase for the project...

You are a project manager. You are estimating cash flows of a
potential project that requires investment of $250,000 in a
machine, including installation cost, and $40,000 in working
capital which will be fully captures at the end of the project. The
marchine has the estimated life of 5 years and will be depreciated
vie simplified straight-line method. The project is expected to
raise the firm's revenues by $330,000 and costs by $125,000
annually. Since the trend of the product...

You are a project manager. You are estimating cash flows of a
potential project that requires investment of $250,000 in a
machine, including installation cost, and $40,000 in working
capital which will be fully captures at the end of the project. The
marchine has the estimated life of 5 years and will be depreciated
vie simplified straight-line method. The project is expected to
raise the firm's revenues by $330,000 and costs by $125,000
annually. Since the trend of the product...

You are a project manager. You are estimating cash flows of a
potential project that requires investment of $250,000 in a
machine, including installation cost, and $40,000 in working
capital which will be fully captures at the end of the project. The
machine has the estimated life of 5 years and will be depreciated
vie simplified straight-line method. The project is expected to
raise the firm's revenues by $330,000 and costs by $125,000
annually. Since the trend of the product...

XYZ Company is considering whether a project requiring the
purchase of new equipment is worth investing. The cost of a new
machine is $340,000 including shipping and installation. The
project will increase annual revenues by $400,000 and annual costs
by $100,000. The machine will be depreciated via straight-line
depreciation for three years to a salvage value of $40,000. If the
firm does this project, $30,000 in net working capital will be
required, which will be fully recaptured at the end...

XYZ Company is considering whether a project requiring the
purchase of new equipment is worth investing. The cost of a new
machine is $340,000 including shipping and installation. The
project will increase annual revenues by $400,000 and annual costs
by $100,000. The machine will be depreciated via straight-line
depreciation for three years to a salvage value of $40,000. If the
firm does this project, $30,000 in net working capital will be
required. What is the annual cash flow of this...

XYZ Company is considering whether a project requiring the
purchase of new equipment is worth investing. The cost of a new
machine is $340,000 including shipping and installation. The
project will increase annual revenues by $400,000 and annual costs
by $100,000. The machine will be depreciated via straight-line
depreciation for three years to a salvage value of $40,000. If the
firm does this project, $30,000 in net working capital will be
required. What is the annual cash flow of this...

(Calculating project cash flows and NPV) You are considering
expanding your product line that currently consists of skateboards
to include gas-powered skateboards, and you feel you can sell 8
comma 000 of these per year for 10 years (after which time this
project is expected to shut down with solar-powered skateboards
taking over). The gas skateboards would sell for $110 each with
variable costs of $50 for each one produced, and annual fixed
costs associated with production would be $200,000....

(Calculating project cash flows and NPV) The Guo Chemical
Corporation is considering the purchase of a chemical analysis
machine. The purchase of this machine will result in an increase in
earnings before interest and taxes of $90,000 per year. The
machine has a purchase price of $400,000,and it would cost an
additional $7,000 after tax to install this machine correctly. In
addition, to operate this machine properly, inventory must be
increased by $12,000.This machine has an expected life of 10...

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