What is the operating cash flow for year 4 of the Eugene project that OreDuck should use in its NPV analysis of the project? The tax rate is 19.00%. During year4, the Eugene project is expected to have relevant revenue of $77,000, relevant variable costs of $26,000, and relevant depreciation of $15,000. In addition,OreDuck would have one source of fixed costs associated with the Eugene project. Yesterday, OreDuck signed a deal with State Beaver Advertising to developa marketing campaign. The terms of the deal require OreDuck to pay State Beaver Advertising either $17000.00 in 4 years if the Eugene project is pursued or$21000.00 in 4 years if the Eugene project is not pursued. Finally, the equipment purchased for the project would be sold in 4 years for an expected after-taxcash flow of $8,000.$47,400.00 (plus or minus $10)$30,390.00 (plus or minus $10)$69,170.00 (plus or minus $10)$55,400.00 (plus or minus $10)None of the above is within $10 of the correct answer

Answered: Image /qna-images/answer/6e68e277-ebbc-4930-b09e-e0dbd80256c2.jpg

What is the operating cash flow for year 4 of the Eugene project that OreDuck should use in its NPV analysis of the project? The tax rate is 19.0 4, the Eugene project is expected to have relevant revenue of $77,000, relevant variable costs of $26,000, and relevant depreciation of $15,000. In additi OreDuck would have one source of fixed costs associated with the Eugene project. Yesterday, OreDuck signed a deal with State Beaver Advertising to de a marketing campaign. The terms of the deal require OreDuck to pay State Beaver Advertising either $17000.00 in 4 years if the Eugene project is pursu $21000.00 in 4 years if the Eugene project is not pursued. Finally, the equipment purchased for the project would be sold in 4 years for an expected afte cash flow of $8,000. $47,400.00 (plus or minus $10) $30,390.00 (plus or minus $10) $69,170.00 (plus or minus $10) $55,400.00 (plus or minus $10) None of the above is within $10 of the correct answer

What is the operating cash flow for year 4 of the Eugene project that OreDuck should use in its NPV analysis of the project? The tax rate is 19.0 4, the Eugene project is expected to have relevant revenue of $77,000, relevant variable costs of $26,000, and relevant depreciation of $15,000. In additi OreDuck would have one source of fixed costs associated with the Eugene project. Yesterday, OreDuck signed a deal with State Beaver Advertising to de a marketing campaign. The terms of the deal require OreDuck to pay State Beaver Advertising either $17000.00 in 4 years if the Eugene project is pursu $21000.00 in 4 years if the Eugene project is not pursued. Finally, the equipment purchased for the project would be sold in 4 years for an expected afte cash flow of $8,000. $47,400.00 (plus or minus $10) $30,390.00 (plus or minus $10) $69,170.00 (plus or minus $10) $55,400.00 (plus or minus $10) None of the above is within $10 of the correct answer

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

considering the purchase of a machine costing P700,000 with a useful life of 10 years. Annual cash cost savings are expected to be P200,000. Prot income tax rate is 25% and its cost of capital is 12%. Prot expects to use straight-line depreciation for tax purposes. Question: a. Compute the expected increase in annual net cash flow for this project. b. Compute the profitability index for the project.
Olinick Corporation is considering a project that would require an investment of $354,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows (ignore income taxes.): Sales Variable expenses Contribution margin Fixed expenses: Salaries Rents Depreciation Total fixed expenses Net operating income Multiple Choice The scrap value of the project's assets at the end of the project would be $30,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to: (Round your answer to 1 decimal place.) 4.8 years $ 210,000 22,000 188,000 7.5 years 40,000 53,000 48,000 141,000 $ 47,000
Calculate the NPV for the following project, assuming that the cost of capital is 15 percent and that the initial after tax cost of starting the project is $5,000,000. Assume that it will provide after-tax operating cash inflows as shown below:Year 1: $1,800,000 Year 2: $1,900,000 Year 3: $1,700,000 Year 4: $1,300,000 Calculate the IRR for the following project. The initial after tax cost is $5,000,000. The project is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3 and $1,300,000 in year 4? Calculate the IRR for the following project. Assume that its initial after tax cost is $5,000,000 and it is expected to provide after-tax operating cash flows of ($1,800,000) in year 1, $2,900,000 in year 2, $2,700,000 in year 3 and $2,300,000 in year 4?
2) Assume that you are considering a project. Its initial after-tax cost is $1,500,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $2,900,000 in year2, $2,700,000 in year 3 and $2,300,000 in year 4. a. Roughly calculate the Internal Rate of Return (IRR) of the project. b. Discuss whether you accept the project or not.
Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $420,000 and has a present value of all its cash flows of $1,350,000. Project 2 requires an initial investment of $5 million and has a present value of all its cash flows of $6 million. (a) Compute the profitability index for each project.(b) Based on the profitability index, which project should the company select?
Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $470,000 and has a present value of all its cash flows of $2,350,000. Project 2 requires an initial investment of $5,000,000 and has a present value of all its cash flows of $6,000,000. (a) Compute the profitability index for each project. (b) Based on the profitability index, which project should the company select? Complete this question by entering your answers in the tabs below. Required A Required B Compute the profitability index for each project. Profitability Index Numerator: Denominator: Profitability Index = Profitability index Project 1 Project 2
Sylvester Pet Foods is evaluating a capital budgeting project that costs $760,000. The project is expected to generate after-tax cash flows equal to $190,600 per year for seven years. SPF's required rate of return is 15 percent. Compute the project's (a) net present value (NPV) and (b) internal rate of return (IRR). (c) should the project be purchased?
METL is evaluating a project projected to have a 7-year life. The initial investment of $4.2 million will be depreciated to zero using straight-line over the project life. The project is expected to create incremental sales of $2.4 million per year and incremental expenses of $1.4 million per year. What is the incremental after-tax operating cash flow (OCF) associated with this project if METL's tax rate is 32%? Enter answer in dollars, rounded to the nearest dollar.
you are trying to decide whether to accept or reject a one-year project. The project is estimated to generate $5,000 in incremental gross profit, which includes $200 in depreciation. Incremental SG&A expense is $400. At a 35% tax rate,what would be the after-tax incremental cash flow ?
Consider a project that will produce sales of $55,150 and have costs of $31,100. Taxes will be $5,400 and the depreciation expense will be $3,325. An initial cash outlay of $2,250 is required for net working capital. What is the project's operating cash flow?
In year 1, what net income should Northeast Bottlers use in its analysis of the Bristol project, which involves expanding into Bristol, if depreciation would be $130000; expenses would be $310000; revenues would be $300000; and the tax rate would be 30%? Assume that the aforementioned depreciation, expenses, and revenues would be $0 without the Bristol project. Give typing answer with explanation and conclusion
Your company is currently considering two investment projects. Each project requires an upfront expenditure of $25 million. You estimate that the cost of capital is 10% and the investments will produce the after tax cash flows on the attached image . a)Calculate the payback period for both projects,then compare to identify which project the firm should undertake. b)Evaluate the advantages and disadvantages of using the payback method in investment decisions and assess the situations where it should be used .

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS