Log in
Finance
1
answer
0
watching
323
views

35.Fairfax Pizza is evaluating a project that would require an initial investment in equipment of 400,000 dollars and that is expected to last for 9 years. MACRS depreciation would be used where the depreciation rates in years 1, 2, 3, and 4 are 44 percent, 34 percent, 16 percent, and 6 percent, respectively. For each year of the project, Fairfax Pizza expects relevant, incremental annual revenue associated with the project to be 600,000 dollars and relevant, incremental annual costs associated with the project to be 520,000 dollars. The tax rate is 50 percent. What is (X plus Y) if X is the relevant operating cash flow (OCF) associated with the project expected in year 1 of the project and Y is the relevant OCF associated with the project expected in year 4 of the project?

40.For project A, the cash flow effect from the change in net working capital is expected to be -500 dollars at time 2, the level of net working capital is expected to be 1,200 dollars at time 0, and the level of net working capital is expected to be 1,800 dollars at time 2. What is the cash flow effect from the change in net working capital expected to be at time 1?

Only answers should be fine. Thank you! :)

Watch
1
answer
0
watching
323
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Nestor Rutherford
Nestor RutherfordLv2
28 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related questions

37. Middlefield Motors is evaluating project A, which would require the purchase of a piece of equipment for 325,000 dollars. During year 1, project A is expected to have relevant revenue of 194,000 dollars, relevant costs of 72,000 dollars, and some depreciation. Middlefield Motors would need to borrow 325,000 dollars for the equipment and would need to make an interest payment of 22,750 dollars to the bank in year 1. Relevant net income for project A in year 1 is expected to be 35,000 dollars and operating cash flows for project A in year 1 are expected to be 118,000 dollars. Straight-line depreciation would be used. What is the tax rate expected to be in year 1? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

36.Fairfax Paint operates stores in Virginia. The firm is evaluating the Vienna project, which would involve opening a new store in Vienna. During year 1, Fairfax Paint would have total revenue of 397,000 dollars and total costs of 276,000 dollars if it pursues the Vienna project, and the firm would have total revenue of 339,000 dollars and total costs of 252,000 if it does not pursue the Vienna project. Depreciation taken by the firm would be 76,000 dollars if the firm pursues the project and 48,000 dollars if the firm does not pursue the project. The tax rate is 45 percent. What is the relevant operating cash flow (OCF) for year 1 of the Vienna project that Fairfax Paint should use in its NPV analysis of the Vienna project?

(Only Answer should be fine. Thank you!)

Fairfax Paint is evaluating a 2-year project that would involve buying equipment for 380,000 dollars that would be depreciated to 50,000 dollars over 2 years using straight-line depreciation. Cash flows from capital spending would be 0 dollars in year 1 and 63,000 dollars in year 2. To finance the project, Fairfax Paint would borrow 380,000 dollars. The firm would receive 380,000 dollars from the bank today and would pay the bank $0 in 1 year and 429,400 dollars in 2 years (consisting of an interest payment of 49,400 dollars and a principal payment of 380,000 dollars). Relevant annual revenues are expected to be 346,000 dollars in year 1 and 306,000 dollars in year 2. Relevant annual costs are expected to be 78,000 dollars in year 1 and 79,000 dollars in year 2. The tax rate is 50 percent. The cost of capital is 9.42 percent. What is the net present value of the project?

44. Middlefield Motors is evaluating project Z. The project would require an initial investment of 55,000 dollars that would be depreciated to 10,500 dollars over 7 years using straight-line depreciation. The project is expected to have operating cash flows of 18,500 dollars per year forever. Middlefield Motors expects the project to have an after-tax terminal value of 373,000 dollars in 4 years. The tax rate is 30 percent. What is (X+Y)/Z if X is the project’s relevant expected cash flow in year 4, Y is the project’s relevant expected cash flow in year 5, and Z is the project’s relevant expected cash flow in year 3? Round your answer to 2 decimal places (for example, 2.89, 0.70, or 1.00).

Weekly leaderboard

Home
Homework Help 3,900,000
Finance 370,000
Start filling in the gaps now
Log in