User Account

All Pages

Calculate the annual operating cash flows without adjusting

Assignment Help Financial Accounting
Reference no: EM132534871

Inflation adjustment:

A project requires an initial investment of $8,000, has a 4-year life and provides expected cash flows as follows, based on year 1 prices and costs:

annual revenue = $5,000

annual cash operating costs = $2,000

annual depreciation = $2,000

terminal cash flow = 0

cost of capital = 14%

T = 30%

Question a. Calculate the annual operating cash flows without adjusting for inflation. (Are these cash flows real or nominal?) Calculate the associated NPV.

Question b. Adjust the cash flows to reflect the effects of inflation, which is expected to affect sales revenue and cash operating expenses at the rate of 4% annually. (Are these cash flows real or nominal?) Calculate the associated NPV.

Question c. Which NPV is the correct one for evaluating the project?

Reference no: EM132534871

Questions Cloud

Calculate what amount is allowed as a deduction : With reference to relevant legislation and case law, discuss and calculate what amount is allowed as a deduction for the decline
Understanding of penetration testing through research : Understanding of penetration testing through research and practical experience. This understanding is to be demonstrated by submission.
Most effective way to raise cash for a company : Discuss the most effective way to raise cash for a company. How would you do it? What strategy would you implement?
What is meant by fundamental fairness : What is meant by "Fundamental Fairness"? How does the court balances individual rights against government interests?
Calculate the annual operating cash flows without adjusting : Calculate the annual operating cash flows without adjusting for inflation. (Are these cash flows real or nominal?) Calculate the associated NPV.
Describe the behavioral attributes political actors : With regard to "good" governance, describe the behavioral attributes political actors tend to hold in common, independent of type of political regime.
Announcement should be answer with explain : With the new expansion, kinston dividends are expected to grow at a 5% rate. Kinston's share price following this announcement should be answer with explain
Calculate the annual operating cash flows : Calculate the annual operating cash flows (they are identical each year). Calculate the relevant terminal cash flows at the end of year 3.
What trends do you envision will shape the ways : Identify areas of policy analysis that you feel will be most important for higher education institutions in the next decade. What trends do you envision will.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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