ABC Projects

QUESTION 1
A project has an initial requirement of $237,049 for new equipment and $14,802 for net working capital. The installation costs to get the new equipment in working condition are 4,678. The fixed assets will be depreciated to a zero book value over the 4-year life of the project and have an estimated salvage value of $125,962. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $82,751 and the cost of capital is 7% What is the project’s NPV if the tax rate is 35%??Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.??????
1 points
QUESTION 2
ABC Company purchased $44,595 of equipment 5 years ago. The equipment is 7-year MACRS property. The firm is selling this equipment today for $10,439. What is the aftertax cash flow from this sale if the tax rate is 31 percent? The MACRS allowance percentages are as follows, commencing with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent.?Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.??????
1 points
QUESTION 3
ABC Company has a proposed project that will generate sales of 332 units annually at a selling price of $278 each. The fixed costs are $6,744 and the variable costs per unit are $29. The project requires $33,280 of equipment that will be depreciated on a straight-line basis to a zero book value over the 4-year life of the project. The salvage value of the fixed assets is $6,900 and the tax rate is 28 percent. What is the operating cash flow for year four??Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.??????
1 points
QUESTION 4
ABC Corporation is considering an expansion project. The necessary equipment could be purchased for $27,519 and shipping and installation costs are another $1,429. The project will also require an initial $5,165 investment in net working capital. The company’s tax rate is 40%. What is the project’s initial investment outlay??Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.?
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1 points
QUESTION 5
A project requires $238,649 of equipment that is classified as 7-year property. What is the book value of this asset at the end of year 3 given the following MACRS depreciation allowances, starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent? ??Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.??????
1 points
QUESTION 6
Sunk costs are a type of incremental cash flow that should be included in all capital-budgeting decisions.???True ?False ????
1 points
QUESTION 7
ABC Compay has the following projections for Year 1 of a capital budgeting project.?
Year 1 Incremental Projections:?
Sales $618,196?
Variable Costs $130,263?
Fixed Costs $35,467?
Depreciation Expense $93,218?
Tax Rate 29%?
Calculate the operating cash flow for Year 1.?Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.??????
1 points
QUESTION 8
A project has an initial requirement of $234,433 for new equipment and $9,764 for net working capital. The fixed assets will be depreciated to a zero book value over the 3-year life of the project and have an estimated salvage value of $90,213. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $76,816 and the cost of capital is 10% What is the project’s NPV if the tax rate is 29%??Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.??????
1 points
QUESTION 9
A project requires $222,307 of equipment that is classified as 7-year property. What is the depreciation expense in year 3 given the following MACRS depreciation allowances, starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent? ??Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.??????
1 points
QUESTION 10
ABC Company purchased $19,706 of equipment 4 years ago. The equipment is 7-year MACRS property. The firm is selling this equipment today for $5,290. What is the aftertax cash flow from this sale if the tax rate is 25 percent? The MACRS allowance percentages are as follows, commencing with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent.?Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.??????
1 points
QUESTION 11
Which of the following cash flows are NOT considered in the calculation of the initial outlay for a capital investment proposal???

All of the above should be considered?

Cost of Installing new equipment?

Increase in net working capital requirements?