Reference no: EM131196795

Write the given finance assignment.

QUESTION 1

ABC Inc. has estimated the following revenues and expenses related phase I of a proposed new housing development? Incremental sales= $6,877,793, total cash expenses $2,588,629, depreciation $306,087, taxes 37%, interest expense, $200,000. What is the operating cash flow?

QUESTION 2
A project requires $234,613 of equipment that is classified as 7-year property. What is the book value of this asset at the end of year 3 given the following MACRS depreciation allowances, starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent?

QUESTION 3
ABC Company purchased $15,339 of equipment 4 years ago. The equipment is 7-year MACRS property. The firm is selling this equipment today for $3,915. What is the After-tax Salvage Value if the tax rate is 28 percent?

The MACRS allowance percentages are as follows, commencing with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent.

QUESTION 4
ABC Company purchased $48,754 of equipment 5 years ago. The equipment is 7-year MACRS property. The firm is selling this equipment today for $7,044. What is the After-tax Salvage Value if the tax rate is 36 percent? The MACRS allowance percentages are as follows, commencing with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent.

QUESTION 5
ABC Inc. has estimated the following revenues and expenses related phase I of a proposed new housing development? Incremental sales= $675,854, total cash expenses $335,472, depreciation $30,139, taxes 34%. What is the operating cash flow?

QUESTION 6
ABC Company has a proposed project that will generate sales of 240 units annually at a selling price of $268 each. The fixed costs are $5,473 and the variable costs per unit are $118. The project requires $21,205 of equipment that will be depreciated on a straight-line basis to a zero book value over the 4-year life of the project. That is, depreciation each year is $21,205/4. The tax rate is 33 percent. What is the operating cash flow?

QUESTION 7
A project has an initial requirement of $219,794 for new equipment and $12,215 for net working capital. The fixed assets will be depreciated to a zero book value over the 3-year life of the project and have an estimated salvage value of $76,846. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $99,723 and the cost of capital is 14% What is the project's NPV if the tax rate is 34%?

QUESTION 8
1. ABC Compay has the following projections for Year 1 of a capital budgeting project.

Year 1 Incremental Projections:

Sales                         $785,719

Variable Costs              $91,387

Fixed Costs                  $65,859

Depreciation Expense    $127,104

Tax Rate                          36%

What is the Operating Cash Flow?

QUESTION 9
A project requires $455,564 of equipment that is classified as 7-year property. What is the book value of this asset at the end of year 5 given the following MACRS depreciation allowances, starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent?

QUESTION 10

Sunk costs are a type of incremental cash flow that should be included in all capital-budgeting decisions.
• True
• False

QUESTION 11
ABC Corporation is considering an expansion project. The necessary equipment could be purchased for $28,899 and shipping and installation costs are another $1,577. The project will also require an initial $6,263 investment in net working capital. The company's tax rate is 40%. What is the project's initial investment outlay?

QUESTION 12
ABC has a proposed project which will generate sales of 120 units at a selling price of $227 each. The fixed costs are $12,967 and the variable costs per unit are $36. The project requires $160,912 of machinery which will be depreciated on a straight-line basis over the 5-year life of the project. That is, depreciation each year is $160,912/5.The tax rate is 36%. What is the operating cash flow?

QUESTION 13
A project has an initial requirement of $235,824 for new equipment and $9,813 for net working capital. The installation costs to get the new equipment in working condition are 11,578. The fixed assets will be depreciated to a zero book value over the 4-year life of the project and have an estimated salvage value of $74,026. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $96,100 and the cost of capital is 15% What is the project's NPV if the tax rate is 27%?

QUESTION 14
A project requires $125,539 of equipment that is classified as 7-year property. What is the depreciation expense in year 3 given the following MACRS depreciation allowances, starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent?

QUESTION 15

A project has an annual operating cash flow of $15,124. Initially, this 4-year project required $2,646 in net working capital, which is recoverable when the project ends. The firm also spent $10,000 on equipment to start the project. This equipment will have a book value of $2,327 at the end of year 4. What is the Total Cash Flow in Year 4 of the project if the equipment can be sold for $4,826 and the tax rate is 34%?

Note: Since Year 4 is the last year of the project, Total Cash Flow in Year 4 = Operating Cash Flow + Terminal Cash Flow

QUESTION 16
Which of the following cash flows are NOT considered in the calculation of the initial outlay for a capital investment proposal?

• Increase in net working capital requirements
• Interest expense related to financing a project
• All of the above should be considered
• Equipment Cost
• Cost of Installing new equipment

QUESTION 17
ABC Company purchased some new equipment 2 years ago for $392,323. Today, it is selling this equipment for $30,301. What is the aftertax cash flow from this sale if the tax rate is 35 percent? The MACRS allowance percentages are as follows, commencing with year one: 20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.

QUESTION 18

The net working capital invested in a project is generally:

• depreciated to a zero balance over the life of the project.
• a sunk cost.
• recovered at the start of the project.
• an opportunity cost.
• recovered at the end of the project.