Name 64 points Fin3403 SECOND EXAM Due December 21, 2017 Douglas Air owns a larg
ID: 2806715 • Letter: N
Question
Name 64 points Fin3403 SECOND EXAM Due December 21, 2017 Douglas Air owns a large forklift. The equipment has a market value of $90,000 today based on a recent appraisal. Originally, it cost $125,900. Last week, the company spent $15,655 repairing the engine and hydraulics. If the company decides to use this forklift (5) for a new product expansion project, the cost assigned to that project for this equipment should be: (6 points) (6) Whatis Operating Cash Floaxw for a project with forecasted annual sales of $650,000 and costs (excluding depreciation) of $284,000. $435,000 which will be de tax rate is 35%. (6 points) The project requires an investment of rs. The marginal (7) Given: To calculate the standard deviation, we first need to calculate the variance. To find the variance, we find the squared deviations from the expected return of the investment. We then multiply each possible squared deviation by its probability; we then add all of these up. The result is the variance, the square root of which is the standard deviation. You are doing an investment analysis and have come with the following IRR's, or expected returns: Scenario Probability 30% 50% 20% IRR Recession Normal Boom -2% 14% 25% What is the standard deviation of the return on this investment? (6 points)Explanation / Answer
5)The cost should be =125900+15655=141555
6)Operating cash flow=Net income+Depreciation
NEt income=(sales-costs-dep)*(1-tax)
Depreciation=435000/5=87000
Net income=(650000-284000-87000)*(1-35%)=181350
OCF=181350+87000=268350
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