capital budgeting, Corporate Finance

Assignment Help:
Ask question #A machine has a cost of $180. It will have a life of 3 years, and will be depreciated straight line to zero salvage value. It will result in sales revenue of $200 per year and cash operating costs of $110 per year. Use of the machine will require an increase in working capital of $70 for the 3 years, beginning at year 0. The appropriate discount rate is 8% and the firm’s tax rate is 40%.

a. Calculate the initial cash flow at time 0.
b. Calculate the annual operating cash flows (they are identical each year).
c. Calculate the relevant terminal cash flows at the end of year 3.
d. What is the NPV for the machine?
Minimum 100 words accepted#

Related Discussions:- capital budgeting

Banks, discuss in detail various sources ffom wherebabks can borrow funds w...

discuss in detail various sources ffom wherebabks can borrow funds within India

Replacement decision, #question.Baobab rolling mills owns a lathe machine w...

#question.Baobab rolling mills owns a lathe machine which was purchased 10years ago at sh. 75 million. The machine had an expected life of 15 yrs at the time it was purchased, and

Interpret the meaning of the dol, Company X produces tea kettles, which it ...

Company X produces tea kettles, which it sells for $12 each. Fixed costs are $650,000 for up to 400,000 units of output. Variable costs are $8 per kettle. a. What is the

Stock exchange, considering floatation on the stock exchange, produce a rep...

considering floatation on the stock exchange, produce a report explaining advantage of such a move

Calculate the profitability ratio, You are a new member of the accounting t...

You are a new member of the accounting team and have been asked to examine the accounts of Bellatrix and calculate appropriate ratios in order to evaluate the company's performance

Market Beta, The management of Nelson plc wish to estimate their firm’s equ...

The management of Nelson plc wish to estimate their firm’s equity beta. Nelson has had a stock market quotation for only two months and the financial management feels that it would

Are there safety and soundness implications of mergers?, Q: Are there safet...

Q: Are there safety and soundness implications of mergers? A: No. All mergers require regulatory approval and are subject to intense examination by regulators. If anything, the

Explain static theory of capital structure, Question 1: (a) Show the fo...

Question 1: (a) Show the forces driving cross-border mergers that operate more strongly than the reasons for transactions that take place within a given country's border. (b

Abu dhabi investment authority - adia, ADIA is a government-owned investmen...

ADIA is a government-owned investment organization that administers the sovereign wealth fund for Abu Dhabi, United Arab Emirates. As per the Sovereign Wealth Fund Institute's rank

Write Your Message!

Captcha
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