Acme Manufacturing is considering a project that requires an investment in new equipment of $3,200,000, with an additional $160,000 in shipping and installation costs. Acme estimates that its accounts receivable and inventories need to increase by $640,000 to support the new project, some of which is financed by a $256,000 increase in spontaneous liabilities (accounts payable and accruals). The total cost of Acme’s new equipment is and consists of the price of the new equipment plus the . In contrast, Acme’s initial net investment outlay is . Suppose Acme’s new equipment is expected to sell for $200,000 at the end of its four-year useful life, and at the same time, the firm expects to recover all of its net working capital investment. The company chose to use straight-line depreciation, and the new equipment was fully depreciated by the end of its useful life. If the firm’s tax rate is 40%, what is the project’s total termination cash flow? $120,000 $504,000 $464,000 $200,000 Please do not answer using excel Thank you!
Acme Manufacturing is considering a project that requires an investment in new equipment of $3,200,000, with an additional $160,000 in shipping and installation costs. Acme estimates that its accounts receivable and inventories need to increase by $640,000 to support the new project, some of which is financed by a $256,000 increase in spontaneous liabilities (accounts payable and accruals). The total cost of Acme’s new equipment is and consists of the price of the new equipment plus the . In contrast, Acme’s initial net investment outlay is . Suppose Acme’s new equipment is expected to sell for $200,000 at the end of its four-year useful life, and at the same time, the firm expects to recover all of its net working capital investment. The company chose to use straight-line depreciation, and the new equipment was fully depreciated by the end of its useful life. If the firm’s tax rate is 40%, what is the project’s total termination cash flow? $120,000 $504,000 $464,000 $200,000 Please do not answer using excel Thank you!
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter11: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 1P: Talbot Industries is considering launching a new product. The new manufacturing equipment will cost...
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Acme Manufacturing is considering a project that requires an investment in new equipment of $3,200,000, with an additional $160,000 in shipping and installation costs. Acme estimates that its accounts receivable and inventories need to increase by $640,000 to support the new project, some of which is financed by a $256,000 increase in spontaneous liabilities (accounts payable and accruals).
The total cost of Acme’s new equipment is and consists of the price of the new equipment plus the .
In contrast, Acme’s initial net investment outlay is .
Suppose Acme’s new equipment is expected to sell for $200,000 at the end of its four-year useful life, and at the same time, the firm expects to recover all of its net working capital investment. The company chose to use straight-line depreciation , and the new equipment was fully depreciated by the end of its useful life. If the firm’s tax rate is 40%, what is the project’s total termination cash flow?
$120,000
$504,000
$464,000
$200,000
Please do not answer using excel
Thank you!
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