EXERCISE 3: CASH INFLOWS AND CASH OUTFLOWS With the following capital budgeting elements, identify the cash outflows and cash inflows that you would use to judge the attractiveness of a project by using the time- value-of-money yardsticks: capital assets ($1.5 million), working capital in year 1 ($500,000) and year 2 ($200,000), salaries ($140,000), working capital loan ($190,000), residual value at the end of the 11th year ($1 million), profit for the years 1 to 10 ($300,000), mortgage ($1.1 million), non-cash expense ($50,000), revenue ($300,000). and sunk costs ($100,000). The project's lifespan is 10 years and the cost of capital is 8%.
EXERCISE 3: CASH INFLOWS AND CASH OUTFLOWS With the following capital budgeting elements, identify the cash outflows and cash inflows that you would use to judge the attractiveness of a project by using the time- value-of-money yardsticks: capital assets ($1.5 million), working capital in year 1 ($500,000) and year 2 ($200,000), salaries ($140,000), working capital loan ($190,000), residual value at the end of the 11th year ($1 million), profit for the years 1 to 10 ($300,000), mortgage ($1.1 million), non-cash expense ($50,000), revenue ($300,000). and sunk costs ($100,000). The project's lifespan is 10 years and the cost of capital is 8%.
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
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Transcribed Image Text:EXERCISE 3: CASH INFLOWS AND CASH OUTFLOWS
With the following capital budgetng elements, identify the cash outflows and cash
inflows that you would use to judge the attractiveness of a project by using the time-
value-of money yardstıcks capital assets ($1.5 million), working capital in year 1
($500,000) and year 2 ($200,000), salaries ($140,000), working capital loan ($190,000).
residual value at the end of the 11th year ($1 million), profit for the years 1 to 10
($300,000), mortgage ($1.1 million), non-cash expense ($50,000), revenue ($300,000),
and sunk costs ($100,000). The project's lifespan is 10 years and the cost of capital is
8%.
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