EBK PRINCIPLES OF MANAGERIAL FINANCE
15th Edition
ISBN: 8220106777916
Author: SMART
Publisher: YUZU
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Textbook Question
Chapter 11, Problem 11.2P
Net cash flow and time line depiction For each of the following projects, determine the net cash flows, and depict the cash flows on a timeline.
- a. A project that requires an initial investment of $120,000 and will generate annual operating
cash inflows of $25,000 for the next 18 years. In each of the 18 years, maintenance of the project will require a $5,000cash outflow . - b. A new machine with an installed cost of 585,000. Sale of the old machine will yield $30,000 after taxes. Operating cash inflows generated by the replacement will exceed the operating cash inflows of the old machine by $20,000 in each year of a 6-year period. At the end of year 6, liquidation of the new machine will yield $20,000 after taxes, which is $10,000 greater than the after-tax proceeds expected from the old machine had ~ been retained and liquidated at the end of year 6.
- c. An asset that requires an initial investment of $2 million and will yield annual operating cash inflows of $300,000 for each of the next 10 years. Operating cash outlays will be $20.000 for each year except year 6, when an overhaul requiring an additional cash outlay of $500,000 will be required. The asset's liquidation value at the end of year 10 is expected to be zero.
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Net cash flow and timeline depiction For each of the following projects, determine the net cash flows, and depict the cash flows on a time line.
a. A project that requires an initial investment of
$123,000
and will generate annual operating cash inflows of
$22,000
for the next
18
years. In each of the
18
years, maintenance of the project will require a
$4,800
cash outflow.
b. A new machine with an installed cost of
$87,000.
Sale of the old machine will yield
$31,000
after taxes. Operating cash inflows generated by the replacement will exceed the operating cash inflows of the old machine by
$22,000
in each year of a
6-year
period. At the end of year
6,
liquidation of the new machine will yield
$17,000
after taxes, which is
$10,000
greater than the after-tax proceeds expected from the old machine had it been retained and liquidated at the end of year
6.
c. An asset that requires an initial investment of
$3
million and will yield annual operating cash inflows of
$293,000
for…
A project has estimated annual net cash flows of $24,500. It is estimated to cost $147,000.
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Determine the cash payback period. Round the answer to one decimal place.
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Chapter 11 Solutions
EBK PRINCIPLES OF MANAGERIAL FINANCE
Ch. 11.1 - Prob. 11.1RQCh. 11.1 - What three types of net cash flows may exist for a...Ch. 11.1 - Prob. 11.3RQCh. 11.1 - Prob. 11.4RQCh. 11.2 - Explain how to use each of the following inputs to...Ch. 11.2 - How do you calculate the book value of an asset?Ch. 11.2 - Prob. 11.7RQCh. 11.2 - Prob. 11.8RQCh. 11.3 - Prob. 11.9RQCh. 11.3 - Prob. 11.10RQ
Ch. 11.4 - Explain how the terminal cash flow is calculated...Ch. 11 - Book value, taxes, and initial investment Irvin...Ch. 11 - If Halley Industries reimburses employees who earn...Ch. 11 - Iridium Corp. has spent 3.5 billion over the past...Ch. 11 - Prob. 11.3WUECh. 11 - Prob. 11.4WUECh. 11 - Prob. 11.5WUECh. 11 - Prob. 11.1PCh. 11 - Net cash flow and time line depiction For each of...Ch. 11 - Replacement versus expansion cash flows Tesla...Ch. 11 - Sunk costs and opportunity costs Masters Golf...Ch. 11 - Prob. 11.5PCh. 11 - Prob. 11.6PCh. 11 - Prob. 11.7PCh. 11 - Book value and taxes on sale of assets Troy...Ch. 11 - Prob. 11.9PCh. 11 - Prob. 11.10PCh. 11 - Calculating initial investment Vastine Medical...Ch. 11 - Prob. 11.12PCh. 11 - Prob. 11.13PCh. 11 - Prob. 11.14PCh. 11 - Prob. 11.15PCh. 11 - Prob. 11.16PCh. 11 - Prob. 11.17PCh. 11 - Prob. 11.18PCh. 11 - Prob. 11.19PCh. 11 - Prob. 11.20PCh. 11 - Prob. 11.21PCh. 11 - Prob. 11.22PCh. 11 - Net cash flows for a marketing campaign Marcus...Ch. 11 - Net cash flows: No terminal value Central Laundry...Ch. 11 - Prob. 11.25PCh. 11 - Ethics Problem Cash flow projections are a central...
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