A project has the following cash in and out flows in its first year: Income generated: R100 000 Cost of sales R30 000 Depreciation R10 000 What would the tax payable for the first year of the project be if the tax rate is 27%?
Q: An investment will pay $600 at the end of each of the next 2 years, $700 at the end of Year 3, and…
A: Net Present Value - It is the difference between the present value of cash outflow and present value…
Q: WUPHF.com, a Scranton-based technology firm, is considering a project th will overhaul its IT…
A: With equity (E), debt(D), cost of equity, Pretax cost of debt, tax rate and debt to equity ratio…
Q: For the car loan described, give the following information. A car dealer will sell you the $30,250…
A: “Since you have posted a question with multiple sub parts, we will provide the solution only to the…
Q: 3.1. Calculate the Payback period for the HMC. 3.2. Calculate the Net Present Value for both the…
A: Payback period refers to the period which is required to meet the initial investment with the annual…
Q: 4-132. Higher interest rates won't cost you as much to drive a car as do higher gasoline prices.…
A: The interest rate that borrowers are liable for on an annual basis is commonly referred to as the…
Q: A machine was purchased to produce metal parts that will generate $80,000 per year. The inflation…
A: Capital budgeting provides modern methods like net present and internal rate of return to determine…
Q: Allegience Insurance Company's management is considering an advertising program that would require…
A: Net present value refers to the method of capital budgeting that is to be calculated by taking the…
Q: U.s.i.n.g. .t.h.e. .s.i.m.p.l.e. .i.n.t.e.r.e.s.t. .m.e.t.h.o.d.,. .f.i.n.d. .t.h.e. .m.o.n.t.h.l.y.…
A: With principle amount (P), period (n) and interest rate (r), the total amount paid is calculated as…
Q: A real estate investor has come to you with a deal for a property which would cost $400,000 &…
A: In capital planning, IRR is frequently used to assess the financial viability of long-term…
Q: Interpreting beta A firm wishes to assess the impact of changes in the market return on an asset…
A: As per CAPM, Therefore, the impact of change in the market return on an asset will be
Q: CASE 1 If Richland Crane maintains the same yuan price and in effect sells for fewer dollars, the…
A: We are going to solve this question using the logic below:Sales volume from year 2 onwards =…
Q: Capital rationing (S5.4) Suppose you have the following investment opportunities, but only $90,000…
A: We can evaluate each project on the basis of profitability index(PI) which shows profit per dollar…
Q: Both Bond Sam and Bond Dave have 12.2 percent coupons, make semiannual payments, and are priced at…
A: A bond is a kind of debt securities issued by governments and private companies to raise funds from…
Q: Wu Systems has the following balance sheet. Assume that all current assets are used in operations.…
A: Net Operating Working Capital (NOWC) is a financial metric that calculates the difference between a…
Q: The real risk-free rate is 2 percent, and inflation is expected to be 3 percent next year and 6…
A: Risk free rate = rf = 2%Inflation rate in Year 1 = ir1 = 3%Inflation rate in Year 2 = ir2 =…
Q: Tyler received a total of $4,000 as loans from his aunt Meagan. After two years, Tyler paid $2,000…
A: A loan refers to a contract where money is borrowed by one party from the other on the promise of…
Q: Use a calculator to evaluate the amortization formula for the values of the variables P, r, and t…
A: When the lender lends a loan to the borrower, he charges a rate of interest on the borrowed amount.…
Q: CX Enterprises has the following expected dividends: $1.15 in one year, $1.23 in two years, and…
A: Companies can distribute their earnings to shareholders by paying dividends. Companies give…
Q: Problem 7-21 Dividend Yield [LO 3] You’ve collected the following information from your favorite…
A: The dividend yield is a financial ratio that indicates the percentage return an investor can expect…
Q: You are planning to buy a lottery ticket for the $5,000,000 jackpot. If you have (Option A). the…
A: Option A is receiving $5,000,000 today. Present Value = $5,000,000 Interest rate, r = 5% Compounding…
Q: 2. Payback (S5.2) Consider the following projects: Project A B C Co -1,000 -2,000 -3,000 C1₁ +1,000…
A: We use capital budgeting to analyze projects and to determine if the projects are financially…
Q: You have the following data for your company. Market Value of Equity: $520 Book Value of Debt:…
A: The WACC of a company refers to the return that the company provides on average to its stakeholders…
Q: What is the difference between fixed costs and variable cost
A: Cost accounting is one of the important branch of accounting being used in business. Under this,…
Q: All other things being equal, which of the following would cause interest rates to rise? a. The…
A: Interest rates is the percentage charged by lenders to borrowers for the use of borrowed funds. It…
Q: ou have just borrowed $20,000 on a 10 year loan at 8% simple interest. Complete the Amortization…
A: The amortization table represents a schedule comprising periodic payments, principal payments,…
Q: The December 31, 2021, balance sheet of Chen, Incorporated, showed long-term debt of $1,470,000,…
A: Operating cash flow, also known as cash flow from operations (CFO), is a measure that reflects the…
Q: Returns on stocks X and Y are listed below: Period 1 2 3 4 5 6 7 Stock X 7% 1% -2% -3% 5% 11% 5%…
A: PeriodStock XStock Y10.07-0.0420.010.13-0.020.044-0.030.0850.050.0760.11-0.0170.05-0.03Required:The…
Q: ABC, Inc. has the following securities outstanding in the market. Common Stock 10,000,000 shares…
A: WACC stands for weighted average cost of capital.It is the blended cost of capital considering all…
Q: You want to buy a house, and a mortgage company will lend you $265,000. The loan would be fully…
A: Loan amount = $265,000Period = 15 years or 180 monthsInterest rate = 7.25% compounded monthly
Q: Problem 5-7 Calculating Annuity Cash Flows [LO 1] For each of the following annuities, calculate the…
A: Annuity payment refers to the amount that is paid at every period including interest and principal…
Q: Problem 12-22 Calculating the Cost of Debt [LO2] Ying Import has several bond issues outstanding,…
A: Bonds are debt securities issued by governments and private companies to raise funds from the…
Q: For each of the following, compute the future value: Note: Do not round intermediate calculations…
A: Future value is the amount at which the current amount will grow over time at a compounded rate of…
Q: Use the formula or a calculator application to find the monthly payment on a home mortgage of…
A: Monthly Payment refers to the amount paid or received from the annuity fund for a specified period…
Q: What annual deposit is necessary to have $15,000 in 7 years if all the money is deposited at 1.5%…
A: Future value = $15,000Period = 7 yearsInterest rate = 1.5% compounded annually
Q: Problem 8-18 Crossover Point [LO 3] Crenshaw Enterprises has gathered projected cash flows for two…
A: The internal rate of return is the discount rate at which the present value of the future cash flow…
Q: Calculate the lump sum you need to have accumulated at age 65 to be able to draw the desired income.…
A: First, we need to determine the first payment in retirement using the inflation rate of 5%. Today,…
Q: You purchased 250 shares of General Motors stock at a price of $77.81 two years ago. You sold all…
A: Annualized holding period return is a measure of the average rate of return earned by an investment…
Q: Statement of Cash Flows Ann's Flowers Inc. reported 2008 net income of $1.80 million and…
A: Cash flows are the cash generated from the operation of the business organisation. In other words,…
Q: Suppose a bank provides the following quotes: Bid 1.2567 CAD per U.S. Dollar and Ask 1.2682 CAD per…
A: In the exchange rate market, the bid price refers to the price that the broker is willing to pay for…
Q: Assume that the Australian dollar's spot rate is $1.25 and that the Australian and U.S 1 year…
A: 1. According to international Fischer effect,St = So × Where,St = spot rate in future So = current…
Q: 2022 McDonald's (MCD) Wendy's (WEN) Total Revenues Net Income Gross Profit Total Captialization…
A: We are given the Total revenues, Net incomes, Gross profits & Total capitalization of three…
Q: You find a zero coupon bond with a par value of $10,000 and 19 years to maturity. The yield to…
A: A financial instrument with a fixed cost that helps a company to raise funds for business operations…
Q: Spy Peripherals Incorporated (SPI) is considering introducing a new smartphone, to be called SPI…
A: It is a case of calculation of the net present value of the project. If the net present value is…
Q: Your firm needs to purchase 1,200 traffic cones from a supplier. One supplier demands a payment of…
A: Present value is an estimate of the present value of future cash values that may be received at a…
Q: A bank is paying 7.5% APR on a CD. (Note: The convention when there are no periodic payments is to…
A: Present value is the estimation of the current value of future cash value which is likely to be…
Q: Over a particular period, an asset had an average return of 6.0 percent and a standard deviation of…
A: In stock market prices tends to change and hence returns also but there is no certainty regarding…
Q: A worker is considering a loan of $97000 over 20 years at an interest rate of 7.9% p.a. with monthly…
A: The difficulty of distributing limited resources among numerous initiatives or investments is one…
Q: Mary has $55,000 in a brokerage account, and she plans to deposit an additional $8,500 at the end of…
A: Loans are frequently designed to be repaid within a predetermined time frame. At the time of loan…
Q: a. Expected return Variance Standard deviation b. Expected risk premium % % %
A: First, we are going to find the return of the portfolio for each scenario using the formula…
Q: Problem 5-10 Calculating Perpetuity Values [LO 1] The Maybe Pay Life Insurance Company is trying to…
A: Perpetuity value is the present value of payments where the payments happen forever. It is the…
A project has the following cash in and out flows in its first year:
Income generated: R100 000
Cost of sales R30 000
What would the tax payable for the first year of the project be if the tax rate is 27%?
Step by step
Solved in 3 steps
- Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for five years. What is the NPV using 8% as the discount rate?Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in year two, $2,000 in year three. $2,500 in year four, and $2,000 in year five. What is the NPV using 8% as the discount rate? For further instructions on net present value in Excel, see Appendix C.The initial cost of a project is $18 million. If a project returns $3 million at year 1 and that cash flow increases by $2 million each year afterwards, what is the payback period? The initial cost of a project is $18 million. If a project returns $3 million at year 1 and that cash flow increases by $2 million each year afterwards, what is the payback period? 5.77 years 4.25 years 3.33 years 2.66 years
- A certain project has a payback of 8 years. The project will generate cash earnings after taxes as follows: P 12,000 for the first 5 years of the payback period. P 15,000 for the last 3 years of the payback period. How much is the cost of the investment? a. P 85,000 b. P 90,000 c. P 105,000 d. P 125,000What is the IRR of the following project? Invest $1000 in a new machine today that will generate $300 of annual after tax cash flows for 6 years (at the end of each year). What is your IRR? 24.8% 21.2% 19.9% 25.6% $25A project has the following annual incremental after-tax cash flows (OCFs) that follow an initial investment of $10 million (all numbers in millions): Year OCF 1 5 2 20 3 5 4 -22 What is the NPV of the project if the required rate of return is 18% per annum?
- An Investment project provides the cash flow inflows of $615 per year for 8 years. a) What is the project payback period if the initial cost is $1,750? X years. b) What is the project payback period if the initial cost is $3,400? X years. c) WHat is the project payback period if the initial cost is $5,100 X years.b. Project B costs $5,000 and will generate after-tax cash inflows of $500 in year 1; $1,200 in year 2; $2,000 in year 3; $2,500 in year 4; and $2,000 in year 5. What is the payback period (in years) for this investment assuming that the cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) c. Project C costs $5,000 and will generate net cash inflows of $2,500 before taxes each year for 5 years. The firm uses straight-line depreciation with no salvage value and is subject to a 25% tax rate. What is the payback period under the assumption that all cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) d. Project D costs $5,000 and will generate sales of $4,000 each year for 5 years. The cash expenditures will be $1,500 per year. The firm uses straight-line depreciation with an estimated salvage value of $500 and has a tax rate of 25%. (1) What is the accounting (book) rate of return based on the original investment?…An investment project is expected to yield $10,000 in annual revenues, will incur $2,000 in fixed costs per year, and requires an initial investment of $5,000. Given a cost of goods sold of 60% of sales and ignoring taxes, what is the payback period in years? * A. 2.50 B. 2.00 C. 5.00 D. 1.25
- Suppose a project costs $2,200 and produces cash flows of $640, $800 and $1,900 in each of the first three years, respectively. What is the IRR of the pioject? O 17.27% O 50.61% O 28.79% O 19.72% O 17.91%Q1) What is the IRR of Project A if the outlay is $6,600 and the annual after-tax.cash inflows are $2000 for four years? 8.16% 9.16 10.26 12.17 10.12 Q2) What is the NPV of Project A? $635.49 345.05 -325.59 Q3 The payback period of Project A is 2.8 years 3.0 years 3.6 years 2.9 years. IA company has an investment opportunity costing Rs.1,20,000 with the cashflow after tax: Rs. 25,000, Rs. 30000, Rs. 35,000, Rs. 40,000 and Rs. 45,000 for the estimated life of 5 years. Evaluate the project by using Payback period, NPV and PI methods if required rate of return is 10%.