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problem1: Your Company is considering building a new office complex. Your company already owns land suitable for the new complex. The current book value of the land is dollar 100,000, however a commercial real estate again has informed you that an outside buyer is interested in purchasing this land & would be willing to pay $650,000 for it. When computing the NPV of your new office complex, ignoring taxes, the appropriate incremental cash flow for the use of this land is:

[A] $100,000

[B] $750,000

[C] $650,000

[D] $0

problem2: You are thinking adding a micro brewery on to one of your company’s existing restaurants. This will entail an increase in inventory of $8,000, and rise in accounts payables of $2,500, & an increase in property, plant, & equipment of dollar 40,000. All other accounts will remain unchanged. The change in net working capital resulting from the addition of the micro brewery is:

[A] $6,500

[B] $5,500

[C] $45,500

[D] $10,500

problem3: Determine which of the following cash flows are relevant incremental cash flows for a project that you are currently considering investing in?

[A] Interest payments on debt used to finance the project.

[B] Research and Development expenditures you have made.

[C] The tax savings brought about by the projects depreciation expense.

[D] The cost of a marketing survey you conducted to determine demand for the proposed project.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M920655

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