Reference no: EM132441086

1. A project has an initial outlay of $1,732. The project will generate annual cash flows of $783 over the 4-year life of the project and terminal cash flows of $258 in the last year of the project. If the required rate of return on the project is 4%, what is the net present value (NPV) of the project?
2. A 5-yr project has an initial requirement of $147,019 for new equipment and $9,851 for net working capital. The fixed assets will be depreciated to a zero book value over 5 years and have an estimated salvage value of $22,221. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $66,029. The cost of capital is 11% and the tax rate is 34%. What is the net present value of the project? 
3. XYZ is considering a 3-yr project. The initial outlay is -$120,000, annual cash flow is $50,000 and the terminal cash flow is $10,000. The required rate of return (cost of capital) is 15%. The net present value is $736.42. What if the annual cash flow increases to $59,000 instead? Re-calculate the NPV. 
4. XYZ is considering a 3-yr project. The initial outlay is -$120,000, annual cash flow is $50,000 and the terminal cash flow is $10,000. The required rate of return (cost of capital) is 15%. The net present value is $736.42. What if the required rate of return is 8% instead? Re-calculate the NPV. 
5. ABC Company purchased $83,833 of equipment 5 years ago. The equipment is 7-year MACRS property. The firm is selling this equipment today for $10,422. What is the After-tax Salvage Value if the tax rate is 33 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.