Solution-What is the expected after-tax cash flows from the

What is the expected after-tax cash flows from the project

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Q1. Tipan's Company is planning to invest Php 40,000 in a 3-year project. Tipan's expected rate of return is 10%. The present value of P1 at 10% for 1 year is .909, for 2 years is .826 and for 3 years is .751. The cash flow net of income taxes will be Php 15,000 for the 1st year (PV of Php 13,635) and Php 18,000 for the 2nd year (PV of Php 14,868). Assuming the rate is exactly 10%, what would the cash flow, net of income taxes be for the 3rd year?

Q2. Malipol Books is considering the purchase of a new binding equipment that will reduce operating costs. The cost of the equipment will be Php 70,000, which will be depreciated straight line over 5 years to a zero-salvage value. Sales are expected to increase Php 65,000 per year, with an expected cash flow earnings before depreciation and taxes/sales ratio of 60%. What is the expected after-tax cash flows from the project if the tax rate is 40%?

Reference no: EM133157492

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What is the expected after-tax cash flows from the project

Reference no: EM133157492

Reference no: EM133157492

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