Calculate the annual after-tax operating cash flow for years

Assignment Help Financial Management
Reference no: EM131523386

Revenues are projected to be \$500,000 the first year and is expected to increase by 20% the second year, 15% the third year and to continue to increase at 10% thereafter. Fixed annual operating costs are expected to be salaries of \$110,000, Utilities \$75,000, Food and Liquor License is 15% of revenues and Taxes are 40% of net revenues.

Required:

A. Calculate the initial outlay of the project.

B. Calculate the annual after-tax operating cash flow for Years 1 -5.

C. Determine the terminal year (in year 5) after-tax non-operating cash flow.

D. What is the project NPV?

E. What is the estimated Internal Rate of Return (IRR) of the project? Should the project be accepted based on the IRR criterion? Why?

Write a Review

What additional financing will be needed to support

Exquisite Fashion Limited expects its sales to increase 20% next year from its current level of \$4.7 million. The company has current assets of \$660,000, net fixed assets of \$1.5 million, and current liabilities of \$462,000. The projected total asset..

Ball can hold sullivan to a contract for sale of the land

Discuss whether Ball can hold Sullivan to a contract for sale of the land.

What is the payback period for the set of cash flows

What is the payback period for the following set of cash flows?

Aims1 to allow students to explore in greater detail the

aims1. to allow students to explore in greater detail the major learning outcomes of the module and to demonstrate a

Each year to pay the emission coupons

Calculate how much money you will at the end of each year to pay the emission’s coupons

Equilibrium with required return equal to expected rerurn

Nick's Enchiladas Incorporated has preferred stock outstanding that pays a dividend of \$3 at the end of each year. The preferred sells for \$45 a share. What is the stock's required rate of return (assume the market is in equilibrium with the required..

What is the new price of the bond if interest rates

You find a bond with 15 years until maturity that has a coupon rate of 8.0 percent and a yield to maturity of 7.1 percent. Suppose the yield to maturity on the bond increases by .25 percent. 1. What is the new price of the bond using duration? What i..

Calculate the beta of portfolio

Calculate the beta of your portfolio, which comprises the following items: (a) Olympic Steel stock, which has a beta of 2.2 and comprises 40 percent of your portfolio, (b) Rent-a-Center stock, which has a beta of 1.5 and comprises 28 percent of your ..

Analyze the effects that each of these transactions

Analyze the effects that each of these transactions will have on the following six components of the company's financial statements for the month of May. Organize your answer in tabular from, using the column headings shown below. Use I for in..

Dollar gain or loss and hpr

You bought a stock for \$37.80 and sold it 7 months later for \$40.18 with no dividends paid. What is your (a) Dollar gain or loss; and (b) HPR? You bought a stock for \$37.80 and sold it 7 months later for \$40.18 with no dividends paid. What is your (a..

What will tracys payments be

Beth has just borrowed \$5,000 on a four-year loan at 8% simple interest. Complete the amortization table below for the first five months of the loan.

Banking crisis just started-reducing availability of credit

Describe one way that a financial manager of a retail company would efficiently adjust his company’s financial management practices to each of the following changes in market conditions: (a) a big competitor enters the market; (b) technological progr..