Marshall mathers is evaluating the purchase of new, Ask an Expert

Finance

Marshall Mathers is evaluating the purchase of new trenching equipment for Scorpio Enterprises. For now, he is only figuring the incremental operating cash flow from the firm's sales of earth the proposed project for the first year. Mathers estimates that the firms sales of earth-moving services will increase by exist10,000 in year 1. Using the new equipment will add an additional exist3,000 to their operating expenses. Interest expense will increase by exist100 because the machine will be partly financed by a loan from the bank. The additional depreciation expense for the new machine will be exist2,000. Scorpio Enterprises' marginal tax rate is 35 percent.

1. Calculate the change in operating income (EBIT) for year 1.

2. Calculate the cash outflow for taxes associated with this new income.

3. What is the net new after-tax income (change in earnings after taxes)?

4. Calculate the net incremental operating cash flow from this project for year 1.

5. Are there any expenses listed that you did not use when estimating the net incremental cash flow? Explain.

View complete question

Financial Management, Finance

Category:- Financial Management
Reference No.:- M92395072

Have any Question?Write your Review or question?

Related Questions in Financial Management

Compose a minimum of 1400 words in which you discuss the

Compose a minimum of 1,400 words in which you discuss the Vera Bradley Case Study. Examine what resources were critical to getting the company off the ground. Elaborate on what conclusions you can draw about the market r ...

Scenario your team has been hired to provide financial

Scenario: Your team has been hired to provide financial analysis for a start-up company, Bobble in Style, which produces customized bobble heads. The bobble heads are made out of less rigid materials and are more true to ...

Exercise benefits us in so many ways including improving

Exercise benefits us in so many ways, including: improving our physical and mental health; reducing our risk of cardiovascular disease; increasing our energy, stamina, strength, and agility; promoting better sleep; impro ...

Choose a publicly traded company to value in preparation

Choose a publicly traded company to value in preparation for a purchase by ABC Company (a fictitious company who has unlimited funds for this purchase). While ABC Company has the funds to purchase the selected company, A ...

Compare and contrast the various forms of business

Compare and contrast the various forms of business organizations. Decide which structure is best suited for your class project (Massage Day Spa (Partnership)) and indicate why. From the e-Activity, infer what the trends ...

Question 1 benefits and risks of international businessas

Question 1 : Benefits and Risks of International Business As an overall review of this chapter, identify possible reasons for growth in international business. Then, list the various disadvantages that may discourage int ...

Assignment 1questions answer with 150 words please on one

Assignment 1 Questions answer with 150 words please on one Microsoft word document just answered with question 1 : answer, Question2 : answer, etc... Assignment in its own document Question1: How can a researcher ensure ...

Assignment all assignments should be written in your own

Assignment All assignments should be written in your own words and provide examples and opinions beyond the textbook or any other source you get them from. I will be looking for more of your opinions and examples beyond ...

Discussion 1describe the target market for your business

Discussion 1: Describe the target market for your business and explain how would you use this information to build a strong sales force to effectively sell your product? (We are doing a non-alcoholic drink) Discussion 2: ...

Please respond to the followinga justify whether the

Please respond to the following: a) Justify whether the standard deviation or covariance is the most significant measurement when adding a risky asset to an already highly risky portfolio. Provide support for your justif ...

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 Financial Management Expert