colstate.view.usg.edu Quizzes Managerial Finance XLS Group B8 F Updates Availa D
ID: 2781039 • Letter: C
Question
colstate.view.usg.edu Quizzes Managerial Finance XLS Group B8 F Updates Availa Do you want to i these updates n agerial Finance X mus/2017 r. HELp GALILEOLocker Loggedin aslanders_ashleigh SRST Managerial Finance XLS Group B8 Fall Semester 2017 CO Discussons Assignments 9 Quizzes![/Grades 1 Groups Rubrics Self 3 Classlist Quiz 12-Capital Budgeting CF-Quiz Ashleigh Landers: Attempt Hollister & Hollister is considering a new project. The project will require $500,000 for new fixed assets, $220,000 for additional inventory, and $40,000 for additional accounts receivable. Short-term debt is expected to increase by $200,000. The project has 6-year life. The fixed assets will be depreciated straight-line to a zero book value over the life of the project At the end of the project, the fixed assets can be sold for 20 percent of their original cost. The net working capital returns to its original level at the end of the project. The project is expected to generate annual sales of $900,000 with costs of $650,000. The tax rate is 34 percent and the required rate of return is 14 percent, wWhat is the project's cash fow at time o? 0 ($-520,000) (6700,000) ($500,000) (S560,00o) (540,000) Save Question 6 (10 points) A project will produce an operating cash flow of $14,600 a yeor for 8 years. The initial fised assot investment in the project will be $50,000. The net aftertax salvage value is estimated at $12,000 and wil be received during the last year of the project's Bfe. what is the net present value of the project the required rate of return as 25 percent? $19,070 19,43Explanation / Answer
1-
cost of new fixed asset
-500000
add investment in net working capital
-60000
investment at time zero
-560000
increase in inventory
220000
add increase in accounts receivables
40000
total increase in current assets
260000
less increase in current liabilities
200000
net increase in working capital
60000
2-
cash outflow
50000
year
present value of cash inflow = cash inflow/(1+r)^n r= 15%
1
14600
12695.65
2
14600
11039.7
3
14600
9599.737
4
14600
8347.597
5
14600
7258.78
6
14600
6311.983
7
14600
5488.681
8
26600
8695.587
sum of present value of cash inflow
69437.72
less cash outflow
50000
net present value
19437.72
1-
cost of new fixed asset
-500000
add investment in net working capital
-60000
investment at time zero
-560000
increase in inventory
220000
add increase in accounts receivables
40000
total increase in current assets
260000
less increase in current liabilities
200000
net increase in working capital
60000
2-
cash outflow
50000
year
present value of cash inflow = cash inflow/(1+r)^n r= 15%
1
14600
12695.65
2
14600
11039.7
3
14600
9599.737
4
14600
8347.597
5
14600
7258.78
6
14600
6311.983
7
14600
5488.681
8
26600
8695.587
sum of present value of cash inflow
69437.72
less cash outflow
50000
net present value
19437.72
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.