Develop the cash flow after tax

Assignment Help Financial Management
Reference no: EM132037013

A company invests in an equipment that costs $300k with $40k salvage value and will be depreciated over 8 years according to the DDB method. The equipment could generate revenues of $25k in the first year and increase by 5000$ every year thereafter. The operating and maintenance costs of the equipment are 1200$ in the first year and increase by 10% each year thereafter. The tax rate of the company Income is 32%.

A. Develop the cash flow before tax (CFBT)

B. Apply the RoR Analysis on the CFBT to check if this project is worthy for the company. Assuming that the MARR of the company is 25%.

C. Develop the cash flow after tax (CFAT)

D. Apply the RoR Analysis on the CFAT to check if this project is worthy for the company. Assuming that the MARR of the company is 25%.

E. Compare and justify the answers of B and D.

Reference no: EM132037013

Questions Cloud

Required yield to maturity on comparable-risk bond : The annual coupon interest rate is 15 percent and the market's required yield to maturity on a comparable-risk bond is 16 percent.
Calculate the implied volatility of the underlying stock : Calculate the implied volatility of the underlying stock. Calculate the volatility of the call option.
What is the market value of the firm after the recap : Assuming the Irrelevance Proposition holds, what is the market value of the firm after the recap? What is the market value of equity?
What will market value of bonds be if they are noncallable : What will the market value of these bonds be if they are noncallable?
Develop the cash flow after tax : Develop the cash flow before tax (CFBT). Develop the cash flow after tax (CFAT)
What is its yield to maturity : A 7-year, 11.00% semiannual coupon bond with a par value of $1000 may be called in 5 years at a call price of $1,255.00. What is it’s yield to maturity?
What is the fair price of this investment : If the discount rate is 9.10% compounding quarterly, what is the fair price of this investment?
A firm enterprise and equity values will increase : A firm’s enterprise and equity values will increase in response to all of the following variables assuming other things are equal except for
Shares must you buy to be assured of earning seat on board : How many more shares must you buy to be assured of earning a seat on the board?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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