Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem: The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. Cash flows are in $ thousands and the corporate tax rate is 34%. Assume all sales revenue is received in cash, all operating costs & income taxes are paid in cash, & all cash flows occur at the end of the year.

 

Year 0

Year 1

Year 2

Year 3

Year 4

Investment

$10,000

-

-

-

-

Sales revenue

-

$7,000

$7,000

$7,000

$7,000

Operating costs

-

2,000

2,000

2,000

2,000

Depreciation

-

2,500

2,500

2,500

2,500

Net working capital (end of year)

200

250

300

200

-

[A] find out the incremental net income of the investment for each year.

[B] find out the incremental cash flows of the investment for each year.

[C] Assume the appropriate discount rate is 12%. find out the NPV of the project?

Note: The 1st step is to estimate the actual amount of cash for each year. Remember to adjust for income for non-cash items [depreciation] & the payment of taxes. This should be done for the initial investment as well as each year of the project [4 years].

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M918538

Have any Question? 


Related Questions in Basic Finance

1 why is it possible to consider anova as a special case of

1. Why is it possible to consider ANOVA as a special case of regression? 2. Give an example of when simultaneous, hierarchical, and stepwise multiple regression analyses might be used in research. 3. How is a log linear ...

1 what is an angel capitalist how do the financing

1. What is an angel capitalist? How do the financing techniques used by angels differ from those used by professional venture capitalists? 2. Distinguish between the four basic types of venture capital funds. Which type ...

Why is the value of a futures or forward contract at the

Why is the value of a futures or forward contract at the time it is purchased equal to zero? Contrast this with the value of the corresponding spot commodity ? Identify and provide a brief explanation of the factors that ...

Perform the following test to determine the effectiveness

Perform the following test to determine the effectiveness of random assignment to conditions. Use random assignment to divide your class into two halves. Then calculate the mean of the two halves on (a) the following thr ...

Choose an global industry and consider the following topics

Choose an global industry and consider the following topics: diversification, investment, management, exchange rates or currency forecasts. Which of these would be most significant to your selected industry and how would ...

Explain how an organization determines whether a hedge is

Explain how an organization determines whether a hedge is sufficiently effective to justify hedge accounting? Describe the primary differences between accounting for fair value hedges and accounting for cash flow hedges? ...

Each of the following studies examines the relationship

Each of the following studies examines the relationship between the quality of breakfast and academic performance for third-grade children. Identify which is correlational, which is experimental, and which is nonexperime ...

1 based on the cash flow statement and personal balance

1. Based on the cash flow statement and personal balance sheet, do the Sampsons have adequate liquidity to cover their recurring cash flows and planned monthly savings in the long-run? If not, what level of savings shoul ...

Consider a lottery that pays to the winner an annuity of

Consider a lottery that pays to the winner an annuity of $800 that begins at the end of the first year and continues at the end of each consecutive year for a total of 18 years with one exception. Because of high adminis ...

Challenges of international financeapa stylethe balance of

Challenges of International Finance APA Style The balance of payments (BOP) can be defined as the statistical record of a country's international transactions over a certain period of time presented in the form of double ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro