Week 5 Practice Set 11-19

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eBook Show Me How Print Item Determine Cash Flows Marigold Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The garden tool is expected to generate additional annual sales of 9,700 units at $52 each. The new manufacturing equipment will cost $210,100 and is expected to have a 10-year life and $16,100 residual value. Selling expenses related to the new product are expected to be 4% of sales revenue. The cost to manufacture the product includes the following on a per-unit basis: Direct labor $8.80 Direct materials 28.90 Fixed factory overhead-depreciation 2.00 Variable factory overhead 4.50 Total $44.20 Determine the net cash flows for the first year of the project, Years 2-9, and for the last year of the project. Use a minus sign to indicate cash outflows. Do not round your intermediate calculations but, if required, round your final answer to the nearest dollar. Marigold Inc. Net Cash Flows Year 1 Years 2-9 Last Year Initial investment Operating cash…

ok ences Mc Graw Hill Graff, Incorporated, has sales of $50,000, costs of $23,000, depreciation expense of $2,250, and interest expense of $2,000. If the tax rate is 23 percent, what is the operating cash flow, or OCF? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Operating cash flow 2 #3 3 89 $ 4 000 000 % 5 8

A B C D E F G H 1 Create a income statement and show net cashflow each year for the 4 years so you can use it for what-if analysis. 2 3 Base case Inputs: 4 5 6 4-year life of the project $26/unit Sales price of product 7 $13/unit Cost to produce the product 8 $1450/year operating costs 9 1250 units First-year production 16% Increase in production each year 1012345167819202123 24 25 26 14 Answer the following question for "what if analysis" 16 What is the IRR for the Base case? 17 $32,000 Initial investment depreciated with MACRS 3 year recovery 28% tax rate What is the IRR if the volume produced does not increase by 16%/year, but only increased 10%/yr.? What is the IRR if the sales price is only $24/unit? What is the IRR if the tax rate increases to 49%? 20 What is the IRR if the initial investment is $39,000? 18 19 22 Which analysis should your company be most concerned about? I J k

Exercise 24-4 (Algo) Payback period, unequal cash flows, and depreciation adjustment LO P1 A machine can be purchased for $200,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $40.000. Income Year 1 $13,500 Year 2 $33,500 Year 3 $83,000 Year 4 $50,500 Year 5 $134,000 Compute the machine's payback period. (Round payback period answer to 2 decimal places.) Year Net Income Depreciation Net Cash Flow Cumulative Net Cash Flow Initial invest $ (200,000) $ (200,000) Year 1 $ 13,500 Year 2 33,500 Year 3 83,000 Year 4 50,500 Year 5 134,000 0 0 Payback period=

Balance of Cash after AJE (in unit dollars, two decimal places, use standard accounting rounding): After completing Part C of the term project you have the following: Revenue 100,000.00 15,000.00 45,000.00 CGS Costs Depreciation 15,000 Salaries 30,000 Net Income Assets Cash 40,000.00 110,000.00 20,000.00 Equipment 100,000.00 AD Equipment (10,000.00) Answer: Liabilities 70,000.00 Salaries Payable 70,000.00 Net Income 40,000.00 Total Liabilities + OE 110,000.00

Exercise 24-4 (Algo) Payback period, unequal cash flows, and depreciation adjustment LO P1 A machine can be purchased for $130,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $26,000. Income Year 1 $8,800 Year 2 $21,800 Year 3 $57,000 Year 4 $32,900 Year 5 $87,200 Compute the machine's payback period. (Round payback period answer to 2 decimal places.) × Answer is complete but not entirely correct. Year Net Income Depreciation Net Cash Flow Cumulative Net Cash Flow Initial invest $ (130,000) $ (130,000) Year 1 $ 8,800 $ 26,000 34,800 34,800 x Year 2 21,800 26,000 47,800 82,600 × Year 3 57,000 26,000 83,000 130,000 ☑ Year 4 32,900 26,000 Year 5 87,200 26,000 Payback period = 2.57 years

After spending $10,000 on client-development, you have just been offered a big production contract by a new client. The contract will add $200,000 to your revenues for each of the next five years and it will cost you $100,000 per year to make the additional product. You will have to use some existing equipment and buy new equipment as well. The existing equipment is fully depreciated, but could be sold for $50,000 now. If you use it in the project, it will be worthless at the end of the project. You will buy new equipment valued at $30,000 and use the 5-year MACRS schedule to depreciate it. It will be worthless at the end of the project. Your current production manager earns $80,000 per year. Since she is busy with ongoing projects, you are planning to hire an assistant at $40,000 per year to help with the expansion. You will have to immediately increase your inventory from $20,000 to $30,000. It will return to $20,000 at the end of the project. Your company's tax rate is 35% and your…

Sd Subject: acounting

Homework, Chapter 26 Net Present Value Method The following data are accumulated by Geddes Company in evaluating the purchase of $105,900 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 $32,000 $55,000 Year 2 20,000 42,000 Year 3 10,000 32,000 Year 4 (1,000) 21,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5. 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 0.665 0.513 0.452 0.376 0.279 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 a. Assuming that the desired rate of return is 15%, determine the net present value for the proposal. Use the table of the present value of $1 presented above. If required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value. Present value of net cash flow Amount to be…

Consider the table of projected NOI cash flows for a commercial real estate asset below. Year 1 Year 2 Year 3 Year 4 Year 5 $ 150,000 $ 157,500 $ 165,375 $ 173,644 $ 182,326 If the building is sold at the end of Year 3 at a 7.25% going-out cap rate, and 4.50% in selling expenses are incurred, what is the total cash flow (TCF) in year 3?

Required informetion The annual revenues associated with several large apartment complexes are $200, $350, S50, $250, S425, and $50 for years 0,1, 2,3, 4, and 5, respectively. Determine the cumulative cash flow and whether each cash flow series is conventional or nonconventional. The costs for years 0, 1,2.3.4, and 5, respectively, are provided in the problems. When the cash fow is zero, assume it to be negative. Year Costs -1500-90 -40 85 -60 -90 The cash flow is conventional 1(Cick to select) The Cumulative onenon Year Cumulative CF.S nonconventional Year CostS -1500 450 -300-400 -125 -400 The cash flow is (Cick t select The Cumulative cash flow is Year Cumulative CF. S Year Cost.S 5 -400 -200 4 1500 -450 -300 -500 The cash flow is (Cick to select) The Cumulative cash flow is Year Cumulative CF,S 1 -450 2 -300 3 -400 Year 4 5 Cost.S -1500 -125 -310 The cash flow is (Cick to select) The Cumulative cash flow is Year Cumulative CF.S

F Question Viewer Cost of Goods Sold - Depreciation = EBIT - Taxes (20%). = Unlevered net income + Depreciation - Additions to Net Working Capital - Capital Expenditures = Free Cash Flow Year 0 A. 17% B. 30% C. 25% D. 22% _-400000_ Year 1 424897.541 - 165000 - 85000 174897.541 - 34979.508 139918.033 85000 - 20000 Year 2 424897.541 - 165000 - 85000 174897.541 - 34979.508 139918.033 85000 - 20000 Year 3 424897.541 - 165000 - 85000 174897.541 - 34979.508 139918.033 85000 - 20000 204918.033 204918.033 204918.033 Visby Rides, a livery car company, is considering buying some new luxury cars. After extensive research, they come up with the above estimates of free cash flow from this project. By how much could the discount rate rise before the net present value (NPV) of this project is zero, given that it is currently 8%?

QUESTION 5 Your firm has net income of $343 on total sales of $1,360. Costs are $750 and depreciation is $120. The tax rate is 30 percent. The firm does not have interest expenses. What is the operating cash flow? $833 $463 $610 $343 $490 QUESTION 6 Seaborn Co. has identified an investment project with the following cash flows. Year Cash Flow $950 1,050 1 2 3 4 1,320 1,200 If the discount rate is 10 percent, what is the present value of these cash flows? O3542.76 3578.84 3418.66 4470.00 3847.03 Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers

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Problem 1: Consider the following cash flows and assume i = 10% for all analyses purposes: Project Cash Flows A D -$2,500 -$7,000 -$5,000 -$5,000 1 $650 -$2,500 -$2,000 -$500 2 $650 -$2,000 -$2,000 -$500 $650 -$1,500 -$2,000 $4,000 4 $600 -$1,500 -$2,000 $3,000 5 $600 -$1,500 -$2,000 $3,000 $600 -$1,500 -$2,000 $2,000 7 $300 -$2,000 $3,000 8 $300 a) Compute the project balances for Projects A and D, as a function of project year b) Compute the future worth values for Projects A and D at the end of service life. c) Suppose that Projects B and C are mutually exclusive. Assume also that the required service period is eight years and that the company is considering leasing comparable equipment that has an annual lease expense of $3,000 for the remaining years of the required service period for both projects. Which project is the better choice?

Problem 9-06 Assume Lasher's Kitchen has pretax earnings of $50,000 after depreciation expense of $10,000. If the firm's tax rate is 20 percent, what is its cash flow from operations? Round your answer to the nearest dollar. $

PROBLEM # 2 Consider the following cash flow of a company: Year Cash flow -600 10 -5000 11-40 1000 a) Compute the IRR for this table b) At MARR 15% determine the acceptability of each project.

Depreciation rates Year 1 Year 2 33.33% Year 3 44.45% 14.81% Year 4 7.41% Complete the following table and calculate incremental cash flows in each year. Hint: Round your answers to the nearest dollar and remember to enter a minus sign if the calculated value is negative. Year 0 Year 1 Year 2 Year 3 Year 4 New machine cost $1,700 After-tax salvage value, old machine $700 Sales revenues $4,500 $4,500 Operating costs except depreciation $380 $380 $4,500 $380 $4,500 $380 Operating income $ $3,364 $3,868 $3,994 After-tax operating income $2,018 $2,321 $2,396 Net cash flows after replacement (adding back depreciation) Incremental Cash Flows $ $ $2,774 $2,321 $2,522 $394 $193 $142 Next evaluate the incremental cash flows by calculating the net present value (NPV), the internal rate of return (IRR), and the modified IRR (MIRR). Assume again that the cost of financing the new project is the same as the WACC and equals 10%. Hint: Use a spreadsheet program's functions or use a financial…

Note: - You are attempting question 8 MNO company is evaluating a proposal for purchase of equipment which will cost S180,000. The cash inflows from the use of equipment is given below: Year Cash flow S60,000 $40,000 S70,000 $125,000 $35,000 1 3 4 Payback period for the proposal is: а. 3 years b. 2 years с. 4 years d. 3.08 years

Accounting

Year Net cashflows 0 -575,000 1 £125,000 2 £248,000 3 £176,000 4 £146,000

Question content area top Part 1 ​(IRR calculation​) Determine the IRR on the following​ projects:   a. An initial outlay of ​$13,000 resulting in a single free cash flow of ​$17,165 after 9 years b. An initial outlay of ​$13,000 resulting in a single free cash flow of ​$46,394 after 15 years c. An initial outlay of ​$13,000 resulting in a single free cash flow of $105,001after 25 years d. An initial outlay of ​$13,000 resulting in a single free cash flow of ​$13,653 after 4 years

QUESTION 3 A company has the project cashflow presented in the table below. If the inflation-free interest rate is 12% per year and the inflation rate is 4% per year, determine the Present Worth of the company's cashflow. Cashflow Item Amount First Cost -18,000 Annual Operating Cost Salvage Value No. of Years -7500 5000 10