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Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,190,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2,180,000 in annual sales, with costs of $1,170,000. The project requires an initial investment in net working capital of $153,000, and the fixed asset will have a market value of $178,000 at the end of the project. Assume that the tax rate is 35 percent and the required return on the project is 12 percent.
What are the net cash flows of the project for the following years?
What is the NPV of the project?
Chasteen, Inc. is considering an investment with an initial cost of $185,000 that would be depreciated straight-line to a zero book value over the life of the project. The cash inflows generated by the project are estimated at $76,000 for the first t..
Assume a $6,500 investment and the following cash flows for two alternatives. Under the payback method, which of the following would be concluded?
Of the capital budgeting techniques discussed, which works equally well with normal and non-normal cash flows and with independent and mutually exclusive project?
What is the problem with using a constant discount rate for all projects? Explain in the context of both all-domestic and international companies.
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In 2014 Cost of goods sold 5,920.00, addition retained earnings 587.50 Net income 1137.50 interest 270.00 Depreciation 1100.00 selling and general expenses 1440.00, Tax rate 35%. What is the amount of dividends paid in 2014?
A pension plan is obligated to make disbursements of $1.7 million, $2.7 million, and $1.7 million at the end of each of the next three years, respectively. The annual interest rate is 8%. If the plan wants to fully fund and immunize its position, how..
You are thinking about buying a home for $120,000 and can put down $20,000. If the lender charges a fixed rate of 6.5% and you want a 30 year mortgage, what is the monthly payment on the $100,000 loan? How much interest do you pay over the life of th..
A company has $15 million in cash, $85 million in accounts receivables, and $200 million in inventory. If the current liabilities are $120 million, what is the current ratio?
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.79 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,110,000 in annual sale..
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