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iVinArrow [24]
3 years ago
7

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

, 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 cash flow for Year 4 of the project if the equipment can be sold for $15,900 and the tax rate is 35 percent? Group of answer choices
Business
1 answer:
slega [8]3 years ago
5 0

Answer:

$73,680

Explanation:

The cash inflows from the project in year 4 consists of the following:  

1) operating cash flow  

2) recovery of net working capital  

3) salvage value of the equipment after tax  

The operating cash flow is $52,620. The recovery of the net working capital is $5,160. The book value of the equipment at the end of year 4 is $17,014, and the market value is $15,900. Since the market value is lower than the book value, there is no capital gain and hence no tax. Therefore, the cash flow for the 4 year period after the equipment has been sold for $15,900 is shown below

The total cash flow in year 4 = $52,620 + $5,160 + $15,900 = $73,680.

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Explanation:

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Answer:

The correct answer is (D)

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You are offered a chance to buy an asset for $200,500 that is expected to produce cash flows of $100,000 at the end of Year 1, $
Lapatulllka [165]

Answer:

What rate of return (IRR) would you earn if you bought this asset?

8,48%

Explanation:

To find the IRR it's necessary to know which is the discount rate that applied to the cash flow of the assets gives a value that compensate the investment of $200,500.

Year 1   $100.000  / (1+0,0848)^1    =  $92.182    

Year 2   $100.000  / (1+0,0848)^2  =  $35.690  

Year 3   $100.000  / (1+0,0848)^3  =   $41.398  

Year 4   $100.000  / (1+0,0848)^4  =   $31.230  

Total Present Value of Cash  Flow=

$92.182  + $35.690 + $41.398 + $31.230 =  $200,500

There is no way to find the IRR without Excel, the only way is to try with different rates in the current cash flow formula.

3 0
2 years ago
How does Apple advertise their Iphone 11 and become successful? It has to be a judgement on how successful they were.
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3 0
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Read 2 more answers
The following standards for variable manufacturing overhead have been established for a company that makes only one product:
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Answer:

variable overhead efficiency variance= $22,780 unfavorable

Explanation:

Giving the following information:

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To calculate the variable overhead efficiency variance, we need to use the following formula:

variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate

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3 years ago
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