User Account

All Pages

What are the initial cash flows

Assignment Help Finance Basics
Reference no: EM133073439

The Select Comfort Company purchased a mattress-stuffing machine 5 years ago for $70,000. When purchased, it had an estimated salvage value of $5,000 at the end of seven years. Last year, the mattress machine was overhauled at a cost of $3,000. The old machine can be sold today for $20,000. A new machine can be purchased for $69,300. It has a 2-year life and is expected to reduce operating expenses by $50,000 per year. After 2 years, the new machine can be sold for $20,000. The company's cost of capital is 9% and the tax rate is 35%. Assume that depreciation is not tax deductible. Answer the following questions.

  1. What are the initial cash flows?
  2. What are the operating cash flows at the end of the first year?
  3. What are the terminal year cash flows?
  4. What is the NPV of the replacement cash flows?

Reference no: EM133073439

Questions Cloud

Provide the appropriate journal entries : The carrying amount of land is $800,000 and machinery is $80,000 (cost $100,000 less accumulated depreciation $20,000). Provide the appropriate journal entries
Insurance package for you and your venture : The insurance package that is appropriate for your needs, detailing what is covered
What is the current stock price for riverbed : What is the current stock price for Riverbed? (Round intermediate calculations to 4 decimal places, e.g. 45.1771 and final answer to 2 decimal places, e.g. 45.1
How much dividend income will Matt recognize this year : Suppose that Matt sold half of his shares to Chris Coop on June 1st for $50,000. How much dividend income will Matt recognize this year
What are the initial cash flows : What are the initial cash flows? What are the operating cash flows at the end of the first year?
What is the project cost at time 0 : At a required return of 6.8 percent, the project has a profitability index of 1.311. A project is expected to provide cash flows of $10,000, $10,800, $13,300, a
What is company a return on levered equity : Company A has an expected net income of 4 million Euros at the end of the year. The company is currently all equity financed but it is planning to undertake som
Make all necessary entries for the year : TINCTURE Company granted 300 share appreciation rights to each of the 500 employees on January 1, 2020. Make all necessary entries for the year
What is the? bond current? yield : An investor is considering purchasing a bond with a 8.97 percent coupon interest? rate, a par value of ?$1,000?, and a market price of ?$1,092.42.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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