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Ivan
3 years ago
7

9. A project has an annual operating cash flow of $52,620. Initially, this four-year project required $5,160 in net working capi

tal, which is recoverable when the project ends. The firm also spent $39,700 on equipment to start the project. This equipment will have a book value of $17,014 at the end of Year 4. What is the total cash flow for Year 4 of the project if the equipment can be sold for $15,900 and the tax rate is 35 percent
Business
1 answer:
Kazeer [188]3 years ago
4 0

Answer:

$74,069.9

Explanation:

The components of cash flow for year 4 of the projects are:

+) the recovery of net working capital

+) the annual operating cash flow

+) the value equipment can be sold

+) the tax payment

As given:

+) The recovery of networking capital = $5,160

+) The annual operating cash flow = $52,620

+) The salvage value of equipment = $15,900

+) The tax the company has to pay is:

<em>Tax payment = (Market value - Book value) x Tax rate = (15,900-17,014) x 0.35 = -389.9</em>

<em />

The cash flow for year 4 = Annual operating cash flow + recovery of net working capital + salvage value of equipment - tax payment

= 52,620 + 5,160 + 15,900 - (-389.9) = $74,069.9

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Answer:

$19,385.93

Explanation:

Net present value is the present value of after-tax cash flows from an investment less the amount invested.  

NPV can be calculated using a financial calculator  

Cash flow in year 0 = $-48,000.

Cash flow in year 1 = $18,000.

Cash flow in year 2 = $22,000.

Cash flow in year 3 = $25,000.

Cash flow in year 4 = $12,000.

Cash flow in year 5 = $7,000.

I = 9%

NPV = $19,385.93

To find the NPV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

7 0
3 years ago
An open-end investment company that can issue an unlimited number of its shares to investors and use the pooled proceeds to purc
artcher [175]

Answer:

A. a mutual fund

Explanation:

A mutual fund -

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Any investor can invest their money in the mutual funds , it is a indirect form of investing in the stock market .

The returns obtained by mutual funds are dependent on the stock market .

Hence , from the given information of the question ,

The correct option is A. a mutual fund .

5 0
3 years ago
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Vera_Pavlovna [14]

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Regulate the firm's pricing behavior.

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