Find year one net cash flow

Assignment Help Financial Management
Reference no: EM131891501

XYZ would like to purchase a new machine. It will cost $50,000. Shipping and installation charges for the equipment are expected to total $5,000. This equipment will be depreciated using straight line for its 5 year economic life to an estimated salvage value of zero. In order to use this equipment, XYZ estimates it will have to add $7,000 initially to its net working capital. If the machine is purchased, it will replace a machine with a book value of $10,000, the old machine can be sold for $25,000. During the first year of operations, the company expects total revenues to increase by $50,000, and from years 2 to 5 increase by $60,000 per year. The incremental operating expense is expected to be $10,000 in the first year and increase each year by 5%. The marginal tax rate is 40%. Find year one net cash flow. Find year two net cash flow. Find year three net cash flow. Find year four net cash flow. Find year five net cash flow.

Reference no: EM131891501

Questions Cloud

Find the initial outlay and net investment : XYZ would like to purchase a new machine. Find the initial outlay/net investment.
Shipping and installation charges for the equipment : XYZ would like to purchase a new machine. It will cost $50,000. Shipping and installation charges for the equipment are expected to total $5,000.
Should the project be accepted or rejected : Compute the NPV for Project M if the appropriate cost of capital is 9 percent. Should the project be accepted or rejected?
What is the percentage realized rate of return : What is the percentage realized rate of return? Assume that interest payments are reinvested at the original YTM
Find year one net cash flow : Find year one net cash flow. Find year two net cash flow. Find year three net cash flow. Find year four net cash flow. Find year five net cash flow.
Find the marginal cost of preferred stock : ABC's common stock currently sells for $22 a share and next year will pay a quarterly dividend of $0.25 per share. Find the marginal cost of preferred stock.
Types of investments over the previous three decades : Suppose you gathered the following return data on these types of investments over the previous three decades:
Find the marginal cost of equity : ABC's tax rate is 35%. Find the marginal cost of equity.
Calculate weighted average cost of capital : ABC would like to expand and have a capital structure of. Calculate the weighted average cost of capital.

Reviews

Write a Review

Financial Management Questions & Answers

  The us dollar equivalent

The us dollar equivalent is 0.3841 for the Brazilian real and 1.8759 for the U.K. pound. this means that

  What must the coupon rate be at on the bonds

Essary Enterprises has bonds on the market making annual payments, with eight years to maturity, a par value of $1000, selling at $948. At this price, the bonds yield 5.9%. What must the coupon rate be at on the bonds?

  Irrevocable trust over the revocable trust

An irrevocable trust has certain advantages not provided by a revocable trust. Which of the following is (are) advantages of the irrevocable trust over the revocable trust?

  What is the NPV of this investment

Muncy, Inc., is looking to add a new machine at a cost of $4,133,250. The company expects this equipment will lead to cash flows of $820,322, $863,275, $937,250, $1,017,610, $1,212,960, and $1,225,000 over the next six years. If the appropriate disco..

  Determine the market value of the firms debt and equity

Consider a levered firm with $10 million face value of debt outstanding, maturing in one year.  - Determine the market value of the firms debt and equity. - Determine the cost of debt and equity capital .

  What is the level of required new funds

BHS Inc. determines that sales will rise from $300,000 to $500,000 next year. Spontaneous assets are 70% of sales and spontaneous liabilities are 30% of sales. BHS has a 10% profit margin and a 40% dividend payout ratio. What is the level of required..

  What is the present value of the liability

If the appropriate discount rate is 8 percent, what is the present value of the liability?

  What happens to value of your investment if interest rate

Suppose you just bought a 25-year annuity of $7,200 per year at the current interest rate of 9 percent per year. What is the value of your annuity today? Present value $ What if interest rates suddenly rise to 14 percent? Present value $ What happens..

  Explain the key difference between debt and equity capital

Briefly explain the key difference between debt and equity capital?

  Procedures for assessing and measuring the risk of portfolio

Describe the procedures for assessing and measuring the risk of a Portfolio?

  Evaluate the financial aspects of making decisions

In this assignment, you will evaluate the financial aspects of making decisions. Which would make more financial sense? Buying or leasing the home?

  Describe the different types of debt securities

Form a discussion on the possible determinants of market interest rates. For each determinant offer illustration for when that determinant may tend to be either stronger or weaker and what is the driving force for that differential impact. Describe t..

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