Fundamentals Of Corporate Finance, 9th Edition
9th Edition
ISBN: 9781260052220
Author: Richard Brealey; Stewart Myers; Alan Marcus
Publisher: McGraw-Hill Education
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Chapter 9, Problem 4QP
a)
Summary Introduction
To compute: The cash flow for the year using dollars in minus dollars out.
b)
Summary Introduction
To compute: The cash flow for the year using adjusted accounting profit.
c)
Summary Introduction
To compute: The cash flow for the year using addback
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Students have asked these similar questions
The Fleming Manufacturing Company is considering a new investment. Financial
projections for the investment are tabulated below. The corporate tax rate is 25 percent.
Assume all sales revenue is received in cash, all operating costs and income taxes are
paid in cash, and all cash flows occur at the end of the year. All net working capital is
recovered at the end of the project.
Investment
Sales revenue
Operating costs
Depreciation
Net working capital spending
Net income
Cash flow
$
Year 1
NPV
3,975 $
$
Year 0
Year O
34,000
$
400
a. Compute the incremental net income of the investment for each year. (Do not round
intermediate calculations.)
Year 1
$ 17,500
3,700
8,500
450
Year 2
4,275 $
Year 1
5,300
$18,000
Year 2
Year 3
b. Compute the incremental cash flows of the investment for each year. (Do not round
intermediate calculations. A negative answer should be indicated by a minus sign.)
Year 3
4,575 $
Year 2
3,800 3,900
8,500
8,500
500
400
$18,500 $15,500
3,100
8,500
?
Year 4
Year 4…
A company is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The financial
staff has collected the following information on the project:
Sales
$16.2 million
Optg costs (Excluding Depreciation)
$11.5 million
Depreciation
$2.2 million
Interest Expense
$1.7 million
The company has a 40% tax rate, and its WACC is 11%. What is the project's cash flow in year 1? Express
your answer in millions and round to the nearest decimal place. (For example, if your answer is $13.26
million, enter 13.3)
A company is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The financial
staff has collected the following information on the project:
Sales
$16.5 million
Optg costs (Excluding Depreciation)
$12.8 million
$2.8 million
Depreciation
Interest Expense
$2.8 million
The company has a 40% tax rate, and its WACC is 11%. What is the project's cash flow in year 1? Express
Chapter 9 Solutions
Fundamentals Of Corporate Finance, 9th Edition
Ch. 9 - Prob. 1QPCh. 9 - Prob. 2QPCh. 9 - Prob. 3QPCh. 9 - Prob. 4QPCh. 9 - Prob. 5QPCh. 9 - Prob. 6QPCh. 9 - Prob. 7QPCh. 9 - Prob. 8QPCh. 9 - Prob. 10QPCh. 9 - Prob. 12QP
Ch. 9 - Prob. 13QPCh. 9 - Prob. 14QPCh. 9 - Prob. 15QPCh. 9 - Prob. 17QPCh. 9 - Prob. 20QPCh. 9 - Prob. 21QPCh. 9 - Prob. 22QPCh. 9 - Prob. 23QPCh. 9 - Prob. 24QPCh. 9 - Prob. 25QPCh. 9 - Prob. 26QPCh. 9 - Prob. 27QPCh. 9 - Prob. 28QPCh. 9 - Prob. 29QPCh. 9 - Prob. 30QPCh. 9 - Prob. 32QPCh. 9 - Prob. 34QP
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