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TiliK225 [7]
3 years ago
11

A 4-year project has an annual operating cash flow of $49,000. At the beginning of the project, $4,000 in net working capital wa

s required, which will be recovered at the end of the project. The firm also spent $21,900 on equipment to start the project. This equipment will have a book value of $4,460 at the end of the project, but can be sold for $5,520. The tax rate is 35 percent. What is the Year 4 cash flow?
Business
1 answer:
ioda3 years ago
6 0

Answer:

$58,149

Explanation:

initial outlay (year 0) = cost of equipment + increase in net working capital = -$25,900

net cash flow year 1 = operating cash flow = $49,000

net cash flow year 2 = operating cash flow = $49,000

net cash flow year 3 = operating cash flow = $49,000

net cash flow year 4 = operating cash flow + net working capital + after tax salvage value:

  • operating cash flow = $49,000
  • net working capital = $4,000
  • after tax salve value = $5,520 - [($5,520 - $4,460) x 35%] = $5,149

total cash flow year 4 = $49,000 + $4,000 + $5,149 = $58,149

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3 years ago
Quantitative Problem 1: Hubbard Industries just paid a common dividend, D0, of $1.50. It expects to grow at a constant rate of 2
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Answer:

The current price of Hubbard's common stock is <u>$25.50</u>.

Explanation:

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Where,

P = Current stock price = ?

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7 0
4 years ago
In 2008, the United States began to witness one of the worst recessions since the 1930s. The collapse of the housing bubble in 2
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B. Liquidation.

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The price index in the first year is 110, in the second year is 100, and in the third year is 96. The economy experienced
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To calculate the rate of inflation/deflation, we have to divide by the oldest price index.

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This means a 9.1% deflation.

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