A 5-yr project has an initial requirement of $100,415 for new equipment and $8,944 for net working capital. The fixed assets will be depreciated to a zero book value over 5 years and have an estimated salvage value of $23,294. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $69,509. The cost of capital is 8% and the tax rate is 29%. What is the net present value of the project?

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A: Formulas:

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A: Calculation of Net Present Value:The net present value is $99,450.25.Excel Spreadsheet:

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Q: A five-year project has an initial fixed asset investment of $280,000, an initial NWC investment of…

A: Equivalent Annual Cost (EAC) is the cost of owning an asset. It is used as an important tool for…

Q: What is the net present value of this project

A: Information Provided: Fixed asset cost = $157,000 Project Annual Sales = $98,000 Variable cost =…

Q: ABC, Inc. is considering a project that requires €21,000 in net working capital and €121,000 in…

A: Here, Initial Investment is €121,000 Change in Working Capital is €21,000 Operating Cash Flow is…

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A: Net present value is the difference between the present value of cash inflows and present value of…

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A:

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A: Given: Initial investment = $2,950,000 Tax rate = 35% Sale value = $660,000

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A: Depreciation is the decrease in value of asset due to wear and tear and due to passage of time.

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A: According to the time value concept, a specific sum of money is worth more than the same sum of…

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A: Initial Investment  $  20,000.00 Annual revenue  $  28,500.00 Labor and materials cost  $…

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Q: oject will be $28 million, and the investment will be depreciated straight-line, down to a salvage…

A: The average return can be computed as follows :

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Q: A 7-year project is expected to provide annual sales of $221,000 with costs of $97,500. The…

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A:

Q: Redmond Incorporated, with a tax rate of 26% and a weighted average cost of capital of 8.4%, is…

A: Net present value = Present value of cash inflow - the present value of cash outflow

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Q: An initial capital of $25,000 was put up for a new project that will produce an annual income of…

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Q: A corporation expects to receive $32,000 each year for 15 years if a particular project is…

A: Rate of return is determined by dividing the net profit after tax by the total amount invested.  The…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.