Calculate the annual cash flows

Assignment Help Finance Basics
Reference no: EM1356458

Suppose you are considering investing in a landscaping business. The cost of the equipment is $80,000 and you will need to invest another $20,000 in net working capital. You estimate that the business will generate net income of $15,000 each year over the next five years. At the end of five years, you will sell the equipment and client list for an estimated $50,000 after taxes and the working capital you invested at the beginning of the project will be released (liquidated) for $20,000. All assets will be depreciated using straight line depreciation over 5 years. Calculate the annual cash flows associated with this investment over its life.

Reference no: EM1356458

Questions Cloud

Describe the role of behavioral sciences in improving human : Describe the role of behavioral sciences in improving human productivity within organizations and Provide examples
Ethical standards in reporting of psychological research : Evaluate a writer's bias and perspectives that may present themselves while preparing a study and how to limit the presentation of these.
Journal entries for bond issuance-interest-amortization : Please describe how to prepare necessary journal entries to record the issuance of bonds, the periodic interest, and amortization of bond premiums and discounts.
What is the rockets acceleration : A 1.5 kg copper block is given an initial speed of 3 m/s on a rough horizontal surface. Because of friction, the block finally comes to test. If the block absorbs 85% of its kinetic energy, calculate its increase in temperature.
Calculate the annual cash flows : Assume you are considering investing in a landscaping business. The cost of the equipment is $80,000 and you will need to invest other $20,000 in net working capital.
Explain management issue at your current place of employment : Explain and identify a management issue at your current place of employment and If you are not currently employed you can do a bit of research and find an issue that exists at another company
Computing total inventory destroyed in fire : A fire completely destroyed the entire inventory of Printing Delight Company on April 10, 2014. Fortunately, the books were not destroyed in the fire. The following information is taken from the books of Printing Delight Company for January 1 to A..
Application of motivational theories : Research motivational theories and choose a least three and write a page paper in which you discuss the principles behind the theories and present examples of their application in business today.
Find rate of return with the margin purchase : Suppose you buy a round lot of Francesca Industries stock on 55% margin when the stock is selling at $20 a share. The broker charges a 10% yearly interest rate, and commissions are 3% of the stock value on the purchase and sale.

Reviews

Write a Review

Finance Basics Questions & Answers

  Bankruptcy-employee claims

Sonia, a book dealer, has following assets: a building worth $155,000, accounts receivable amounting to $32,500 due within the next three months, and $25,000 cash in the bank.

  Calculate the dollar cost of abc''s jpy loan

ABC Inc. borrows 100m JPY when JPY spot rate is JPY120/$.  Calculate the dollar cost of ABC's JPY loan.

  Determine the conversion price

Chocolate corporation convertible debentures were issued at their $1,000 par value in 2007. At any time prior to maturity on February 1, 2027,

  Description of present value of lump sum

What is the future value of lump sum at the end of year 5? What is the future value of mixed stream at the end of year 5? Based upon your findings in parts (a) and (b), which alternative should Gina take?

  Determine the highest expected payoff

Zymase is a biotechnology start-up company. Research at Zymase must choose one of three different research strategies. The payoffs & their likelihood for every strategy are given below.

  A proposal for a negative income tax

A proposal for a negative income tax is created to give an income guarantee for each person, irrespective of his age or status, of $3,000 per year.

  Describe about investments

Describe about investments and stock returns are independent-one stock in increasing in price has no effect on the prices of the other stocks

  Compute the total expected costs

I am planning going to graduate school in three years. Current estimated cost is $32,000 per year. Those costs are expected to grow every year at the rate of inflation.

  An aversion to risk or a high tolerance for risk

Given an individual risk profile, be it an aversion to risk or a high tolerance for risk

  Calculating nominal cash flow

Etonic Inc. is considering an investment of $365,000 in an asset with an economic life of 5 years. The company estimates that the nominal yearly cash revenues and expenses at the end of the 1st year will be $245,000

  Describe what profit or loss would the investment banker

Describe what profit or loss would the investment banker incur if the issue were sold to the public at an average price of $25 per share?

  Determine the stocks capitalization rate

A stock with a current price of $25 per share pays a current annual dividend of $2 which is expected to increase by four percent per year.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd