Determine the net initial investment annual cash flow and, Ask an Expert

Finance

1) A firm is taking into consideration of replacing its aging production equipment. Firm has the cost of capital of= 9.5%. Its marginal tax rate is= 40%. New equipment will cost= $1.2M inclusive of shipping and installation. It will have the expected life of five years. Revenues are expected to rise $600K the first year and $50K a year thereafter. Company utilizes straight line depreciation and no salvage value is supposed. Old equipment is completely depreciated and can be sold today for $50K. Expenses will rise $96K first year and increase $25K each year thereafter. Week long training seminar will be held in Toronto and will cost= $10K. Net working capital will rise= $40K. We think we can sell new equipment for= $75K in 5 years.

Determine the net initial investment, annual cash flow, and terminal value?

Requirements: Min Pages: 1

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M914724

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Net income is 300 million depreciation is 70 million

Net income is 300 million, depreciation is 70 million, capital expenditures are 120 million, investment in working capital is 30 million, interest expenses (before tax) are 40 million, and outstanding debt is 850 million ...

What is the future value of a 9 5 year annuity due that

What is the future value of a 9%, 5 year annuity due that pays 300 each year?

What are the differences between the federal deficit and

What are the differences between the Federal deficit and Federal Debt? How does a government budget deficit affect the economy, specifically the unemployment rate and job creation? Identify two periods in recent history ...

Timco is considering project a project a will cost 23000 it

Timco is considering project A. Project A will cost 23000. It should provide after tax cash inflows of 5000 per year for the next 6 years. The cost of funds is 10%. Find the MIRR. Should Timco buy it?

Are us executives paid too much particularly compared to

Are U.S. Executives paid too much particularly compared to the average worker in their organization?

What is the annual coupon rate of a 7-year corporate bond

What is the annual coupon rate of a 7-year corporate bond given that its current price is $930, par = 1,000, semi-annual coupon, YTM=10%?

What would be a potential investment strategy that would

What would be a potential investment strategy that would basically take advantage of the fact that we are currently in the longest bull market in a while and also that index investing has become really popular. (how does ...

A closed-end fund starts the year with a net asset value of

A closed-end fund starts the year with a net asset value of $25. By year-end, NAV equals $26.40. At the beginning of the year, the fund is selling at a 3% premium to NAV. By the end of the year, the fund is selling at a ...

What are financial ratios commonly used in quantitative

What are financial ratios commonly used in quantitative models of debt ratings? List THREE financial ratios that represent three different factors and explain why these ratios can capture the company's ability to meet it ...

Suppose the annualized yield on a one-year security today

Suppose the annualized yield on a one-year security today is 0.01. The markets expect the annualized yield on a one-year security to be 0.02 one year from today, 0.03 two years from today, and 0.04 three years from today ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert