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Ulleksa [173]
2 years ago
5

A project is expected to generate annual revenues of $129,300, with variable costs of $72,400, and fixed costs of $18,900. The a

nnual depreciation is $4,950 and the tax rate is 21 percent. What is the annual operating cash flow
Business
1 answer:
Talja [164]2 years ago
4 0

Answer:

$42,950

Explanation:

Data and Calculations

Revenue                                            $129,300

Less variable costs                          ($72,400)

Less  fixed costs                               ($18,900)

add depreciation                                $4,950

Operating Cash flow                         $42,950

Thus

The annual operating cash flow $42,950.

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Im gonna go with e sorry if it’s wrong
6 0
3 years ago
South Tel Communications is considering the purchase of a new software management system. The system is called B-lmage, and it i
gavmur [86]

Answer:

Explanation:

South Tel Communications is considering the purchase of a new software management system. The system is called B-image, and it is expected to drastically reduce the amount of time that company technicians spend installing new software. South Tel's technicians currently spend 6,000 hours per year on installation which cost South Tel $25 per hour. The owners of the B-image system claim that their software can reduce time on task by at least 25%. The system requires an initial investment of $55,000 and an additional investment of$10,000 for technician training on the new system. Annual upgrades will cost the firm $15,000 per year. Because the investment is comprised of software, it can be fully expensed in the year of the expenditure (no depreciation). South Tel faces a 30% tax rate and uses a 9% cost of capital to evaluate projects of this type.

A. Assuming that South Tel has sufficient taxable income from other projects so that it can immediately expense the cost of the software, what are the free cash flows for the project for years zero through five?

Total (65,000)

Cash flow year 1 - 5

Saving on installations per year 450,000

Less: Annual upgrades ( 15,000)

Total 435,000

Less: Tax (30%) (130,500);

Total project free cash flow 304,500.answer

4 0
3 years ago
Suppose you started a new all-equity financed company that is expected to generate an ROE of 15% indefinitely. The current book
Luda [366]

Answer:

The value of the stock at start-up = $67.5

Explanation:

According to the dividend valuation model , the current price of a stock is the present value of the expected future dividends discounted at the required rate of return  

This principle can be applied as follows:  

The value of stock today is the present value of the future return discounted at the required rate of return

The return can be computed as the ROE × Book value of share

Return = 15%× 30 =4.5

Price of stock today = D× (1+g)/r-g

D= current return, g- growth rate, r-required rate of return

DATA: D= 4.5, g= 5%, r= 12%

PV  = 4.5× (1.05)/(0.12-0.05)

= 67.5

The value of the stock at start-up = $67.5

7 0
2 years ago
Imagine yourself as a business owner just before an economic event such as a recession or depression. What impact would a sudden
liberstina [14]

An economic depression is when the price of the goods in the market is decreasing. Your income will be less as the prices of the goods are low

8 0
2 years ago
Read 2 more answers
A portfolio consists of $13,400 in Stock M and $18,900 invested in Stock N. The expected return on these stocks is 8.50 percent
Aneli [31]

Answer:

The expected return on the portfolio is:

10.31% ($3,331.40)

Explanation:

a) Data and Calculations:

Portfolio investments:  Expected Returns %   Expected Returns $

Stock M = $13,400           8.50%                           $1,139

Stock N = $18,900          11.60%                           $2,192.40

Total        $32,300          10.31%                           $3,331.40

Total expected returns in percentage is Expected Returns $/Total Investments * 100

= $3,331.40/$32,300 * 100

= 10.31%

b) The expected returns on the portfolio is derived by calculating the expected returns for each investment and summing up.  Then dividing the expected portfolio returns by the portfolio investment.  This yields 10.31% percentage value.

3 0
3 years ago
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