Incremental operating cash inflows

Assignment Help Financial Management
Reference no: EM131551068

Incremental operating cash inflows

A firm is considering renewing its equipment to meet increased demand for its product. The cost of equipment modifications is $1.95 million plus $108,000 in installation costs. The firm will depreciate the equipment modifications under? MACRS, using a? 5-year recovery period. Additional sales revenue from the renewal should amount to $1.19 million per? year, and additional operating expenses and other costs? (excluding depreciation and? interest) will amount to 45% of the additional sales. The firm is subject to a tax rate of 40%. (Note?: Answer the following questions for each of the next 6? years.)

a. What incremental earnings before? depreciation, interest, and taxes will result from the? renewal?

b. What incremental net operating profits after taxes will result from the? renewal?

c. What incremental operating cash inflows will result from the? renewal?

Reference no: EM131551068

Questions Cloud

What is present-annual and future equivalent of fuel costs : what is the present, annual, and future equivalent of its fuel costs? Use both actual and constant-dollar analysis.
Compute effective annual interest rate of the loan : Compute the effective annual interest rate of the loan.
Annualized dividend yield : The S&P 500 Index price is 1925.28 and its annualized dividend yield is 2.40%. LIBOR is 3%.
What is the required rate of return on your company stock : What is the required rate of return on your company’s stock? What is the estimated value per share of your firm’s stock?
Incremental operating cash inflows : What incremental operating cash inflows will result from the? renewal? What incremental net operating profits after taxes will result from the? renewal?
Calculate their operating and cash cycle : Ansley Inc. wants to understand its operating and cash cycle better. calculate their operating and cash cycle.
What can we use to measure each of the variables : What can we use to measure each of the variables?
Two identical firms and the firm with debt : There are two identical firms and the firm with debt is more highly valued.
Why in these circumstances there is no option contract : What must Jennifer do? Also, explain why in these circumstances there is no option contract.

Reviews

Write a Review

Financial Management Questions & Answers

  Stock valuation debate the current price of the stock

Using the stock valuation debate the current price of the stock and discuss what you think the stock price should be. What are the limitations of the stock valuation techniques in pricing Apple stock? Which valuation technique is best for valuing App..

  Use as initial investment in fixed assets

What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?

  Leveraged buyouts follow a simple model

"Leveraged buyouts follow a simple model - the PE firm acquires a listed firm, delists it, loads it up with debt and sell it off to the market. Given that the equity contribution is so low - there is virtually no risk to the private equity firm." Com..

  Stock price in five years if p-e ratio remained unchanged

Kellogg Co. (K) recently earned a profit of $2.52 earnings per share and has a P/E ratio of 19.50. The dividend has been growing at a 9 percent rate over the past few years. If this growth rate continues, what would be the stock price in five years i..

  What is the real interest rate

Write down the relationship between nominal rates of return (rnominal), real rates of return (rreal), and the inflation rate (π).

  Rate of return and make no additional contributions

You have just made your first $3,000 contribution to your retirement account. Assuming you earn an 9 percent rate of return and make no additional contributions. What will your account be worth when you retire in 45 years?

  European call option with a strike price

What is the value of a 6-month European call option with a strike price of $51?

  Evaluate the acquisition of a special-purpose machine

You have been asked by the firm to evaluate the acquisition of a special-purpose machine.

  What is the return on assets-what is the return on equity

Keller Cosmetics maintains an operating profit margin of 8.20% and a sales-to-assets ratio of 3.30. It has assets of $540,000 and equity of $340,000. Interest payments are $34,000 and the tax rate is 35%. What is the return on assets? What is the ret..

  Find the present value of the annual savings

Blake Company has 3400 hourly workers. They work 40 hours a week, at the rate of $7.00 an hour, and they are paid every Friday. The company has decided to pay them twice a month. The cost of printing and processing each check is $1.25. The cost of ca..

  Filers capital structure weights on market value basis

Filer Manufacturing has 9 million shares of common stock outstanding. The current share price is $75, and the book value per share is $6. Filer manufacturing also has two bond issues outstanding. What are Filer's capital structure weights on a book v..

  What incremental free cash flows

what incremental free cash flows should be included to account for the need to accelerate the purchase of the tank? cars?

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