When computing the net present value of the project what

Assignment Help Accounting Basics

Reference no: EM13592785

Morgado Inc. has provided the following data to be used in evaluating a proposed investment project:

Initial investment $130,000
Annual cash receipts $78,000
Life of the project 6 years
Annual cash expenses $43,000
Salvage value $13,000

The company's tax rate is 30%. For tax purposes, the entire initial investment will be depreciated over 5 years without any reduction for salvage value. The company uses a discount rate of 19%.

1. When computing the net present value of the project, what are the annual after-tax cash receipts? A. $39,000 B. $13,650 C. $54,600 D. $23,400.

2. When computing the net present value of the project, what are the annual after-tax cash expenses? A. $12,900 B. $30,100 C. $55,900 D. $30,000.

3. By how much does the depreciation deduction reduce taxes each year in which the depreciation deduction is taken? A. $6,500 B. $15,167 C. $18,200 D. $7,800.

4. When computing the net present value of the project, what is the after-tax cash flow from the salvage value in the final year? A. $9,100 B. $3,900 C. $13,000 D. $0.

Reference no: EM13592785

Questions Cloud

Time tickets for factory employees during the month of : time tickets for factory employees during the month of august are summarized as follows. prepare a journal entry to

The 2012 annual report for sneer corporation disclosed that : the 2012 annual report for sneer corporation disclosed that the company declared and paid preferred dividends in the

A company must repay the bank 42000 cash in five years for : a company must repay the bank 42000 cash in five years for a loan. the loan agreement specifies 7 interest compounded

If two lines have a transversal which forms corresponding : prove if two lines have a transversal which forms corresponding angles that are congruent then the two lines are

When computing the net present value of the project what : morgado inc. has provided the following data to be used in evaluating a proposed investment projectinitial investment

Write an equation in slope-intercept form for the line that : question write an equation in slope-intercept form for the line that satisfies the given conditions. x-intercept is -6

A youngs double-slit interference experiment gives bright : a youngs double-slit interference experiment gives bright fringes separated by 30.5 cm on a screen when the experiment

Thurman munster the owner of adams family rvs is : thurman munster the owner of adams family rvs is considering the addition of a service center his lot. the building and

Slick corporation is a small producer of synthetic motor : slick corporation is a small producer of synthetic motor oil. during may the company produced 5000 cases of lubricant.

User Account

All Pages