1- BROWN Co. is determining whether they should purchase a new machine. The machine cost is $380,000, installation costs are $20,000. MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for this 3 year project is $160,000, $230,000, $100,000 respectively. The machine could be sold at the end of the 3 years for $60,000. What is the initial investment for this project? 2- BROWN Co. is determining whether they should purchase a new machine. The machine cost is $380,000, installation costs are $20,000. MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for this 3 year project is $160,000, $230,000, $100,000 respectively. The machine could be sold at the end of the 3 years for $60,000. What is the OCF (operating cash flow) for year 1 for this project?
1- BROWN Co. is determining whether they should purchase a new machine. The machine cost is $380,000, installation costs are $20,000. MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for this 3 year project is $160,000, $230,000, $100,000 respectively. The machine could be sold at the end of the 3 years for $60,000. What is the initial investment for this project? 2- BROWN Co. is determining whether they should purchase a new machine. The machine cost is $380,000, installation costs are $20,000. MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for this 3 year project is $160,000, $230,000, $100,000 respectively. The machine could be sold at the end of the 3 years for $60,000. What is the OCF (operating cash flow) for year 1 for this project?
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter11: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 8P: The Rodriguez Company is considering an average-risk investment in a mineral water spring project...
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Question
![1- BROWN Co. is determining whether they should purchase a new
machine. The machine cost is $380,000, installation costs are $20,000.
MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for
this 3 year project is $160,000, $230,000, $100,000 respectively. The
machine could be sold at the end of the 3 years for $60,000. What is
the initial investment for this project?
2- BROWN Co. is determining whether they should purchase a new
machine. The machine cost is $380,000, installation costs are $20,000.
MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for
this 3 year project is $160,000, $230,000, $100,000 respectively. The
machine could be sold at the end of the 3 years for $60,000. What is
the OCF (operating cash flow) for year 1 for this project?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F485c82d8-c5f6-4fc8-9179-79a78238566d%2F4269982a-1c36-4cf0-8112-911495747cf7%2F0wwbjb_processed.png&w=3840&q=75)
Transcribed Image Text:1- BROWN Co. is determining whether they should purchase a new
machine. The machine cost is $380,000, installation costs are $20,000.
MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for
this 3 year project is $160,000, $230,000, $100,000 respectively. The
machine could be sold at the end of the 3 years for $60,000. What is
the initial investment for this project?
2- BROWN Co. is determining whether they should purchase a new
machine. The machine cost is $380,000, installation costs are $20,000.
MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for
this 3 year project is $160,000, $230,000, $100,000 respectively. The
machine could be sold at the end of the 3 years for $60,000. What is
the OCF (operating cash flow) for year 1 for this project?
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