What is the project operating cash flow

Assignment Help Financial Management
Reference no: EM131328141

The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service:

Projected sales $25 million

Operating costs (not including depreciation) $11 million

Depreciation $5 million

Interest expense $4 million

The company faces a 30% tax rate. What is the project's operating cash flow for the first year (t = 1)? Write out your answer completely. For example, 2 million should be entered as 2,000,000.

Reference no: EM131328141

Questions Cloud

What is the project payback period : A project has an initial cost of $46,575, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 13%. What is the project's payback period?
Produces and markets all types of electronics goods : Hi-Tech Electronics Limited was established in 2006 in Kualalampur, Malaysia. It produces and markets all types of electronics goods in most of the Asian and Pacific countries. The national employees demanded the management to pay equally with that o..
If interest rates are low bond prices are high : Guided Response: Review several of your classmates’ posts. Respond to at least two classmates by sharing your view of their conclusion. Are there any other factors that you can offer that may explain why the bond is selling at a premium or discount? ..
What is the equipments after-tax net salvage value : Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $14 million, of which 80% has been depreciated. The used equipment can be sold today for $4.9 million, and its tax rate is 40%. What is the equipment'..
What is the project operating cash flow : The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: The company faces a 30% tax rate. What is the project's operating cash flow for the first year (t = 1..
What are the two projects net present values : Your division is considering two investment projects, each of which requires an up-front expenditure of $19 million. You estimate that the investments will produce the following net cash flows. What are the two project's net present values, assuming ..
Calculate the npv for each type of truck : Dave's industries must choose between a gas-powered and an electric-powered forklift truch for moving in its factory. Since both forklifts perform the same function, the firm will choose only one. Annual net cash flows include depreciation expenses. ..
Which strategy has highest expected value for equity holders : Consider a start-up firm that has three different potential business models whose after-tax payoffs are summarized below along with their respective probabilities: With $0 in debt, which strategy has the highest expected value for equity holders?
About adding more growth stocks to your portfolio : You recently overheard a two finance students talking in the cafeteria about the growth rate of Comstock’s Cookies. As a savvy investor yourself, you are thinking about adding more growth stocks to your portfolio. What is the current assumed growth r..

Reviews

Write a Review

Financial Management Questions & Answers

  Comprehensive financial analysis of a public corporation

Would you invest your financial capital in the selected firm as a shareholder and would you invest your human and intellectual capital in the firm as an employee?

  What is the present yearly net operating income or loss

Detmer Holdings AG of Zurich, Switzerland, has just introduced a new fashion watch for which the company is trying to find an optimal selling price. Marketing studies suggest that the company can increase sales by 5,000 units for each SFr2 per unit r..

  Sufficient internally generated equity to cover equity cost

Rodney Ruxin's Legal Services is raising capital to open a new law office in southern California. The project has an initial start up cost of $752,995.  The firm has sufficient internally generated equity to cover the equity cost of this project. Wha..

  Define large sales of stockpiled gold by foreign governments

Suppose inflation is expected to increase the cost of producing gold by 10% a year but the price of gold does not change because of large sales of stockpiled gold by foreign governments.

  How many shares must he sell to create a homemade dividend

A firm has $500 million of assets that includes $50 million of cash and 10 million shares outstanding. The firm uses $50 million of its cash to pay dividends. If an investor has 1000 shares, how many shares must he sell to create a homemade dividend ..

  Portfolio that is equally invested in the two assets

A stock has a beta of .6 and an expected return of 10 percent. A risk-free asset currently earns 4.1 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? If a portfolio of the two assets has an expected r..

  Bond yield and after-tax cost of debt

A company's 6% coupon rate, semiannual payment, $1,000 par value bond that matures in 20 years sells at a price of $615.37. The company's federal-plus-state tax rate is 30%. What is the firm's after-tax component cost of debt for purposes of calculat..

  Depreciated by the straight-line method

W. Rooney Company. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life, and would have a zero salvage value. What is th..

  Stock dropped substantially after the announcement

Conagra just announced an earnings increase of 2%, but the price of the stock dropped substantially after the announcement. Is there a rational explanation for this result?

  What is the first years free cash flow

Continuing from Problem 1, at the end of the first year, Chemtec is expecting sales of $250 million and costs of $125 million. There are no more required investments in either net working capital or plant and equipment. Assuming that all of these cas..

  What is the present value of perpetuity

You have decided to put a $100 a week into a savings account that offers 2.6% compounded weekly. How much would you have in your account after 6 years? Using problem 2 how much would you have if you were to make your first payment today, i.e. made it..

  Which valuation method does your organization

Which valuation method does your organization use to value these assets and liabilities - historical cost accounting (HCA) or current cost accounting (CCA)?

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!

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