 |
|
| Browse | Ask | Answer | Search | Join/Login |
|
|
||||
|
What is the net present value of the project?
Brodigan Corporation has provided the following informationconcerning a capital budgeting project:
Investment required in equipment $450,000 Net annual operating cash inflow $220,000 Tax rate 30% After-tax discount rate 12% The expected life of the project and the equipment is 3years and the equipment has zero salvage value. The company uses straight-line depreciation on all equipmentand the depreciation expense on the equipment would be$150,000 per year. Assume cash flows occur at theend of the year except for the initial investments. The company takes income taxes into account in its capitalbudgeting. The net annual operating cash inflow is thedifference between the incremental sales revenue andincremental cash operating expenses. What is the net present value of the project? |
||||
|
||||
|
what is the present value of the lease payments?
(Ignore income taxes in this problem.) SchaadCorporation has entered into an 8 year lease for a pieceof equipment. The annual payment under the lease will be $2,500, with payments being made at the beginningof each year.
If the discount rate is 14%, what is the present value of the lease payments? PLEASE SHOW WORK. I don't understand how to do this |
||||
|
||||
|
I have done an entire test except 4 questions. That's including the one that is posted. I don't understand even where to start. I have a text book but its not making any sense to me.
 Originally Posted by Curlyben
I have done an entire test except 4 questions. That's including the one that is posted. I don't understand even where to start. I have a text book but its not making any sense to me. |
||||
|
||||
|
You calculate net present value by applying the discount rate for each cash expenditure. For example, if I have to pay someone $1 a year from now, and the discount rate is 14%, then the present value of that dollar is $1/1.14, or $0.877. This is because 87.7 cents invested today for one year with 14% growth would be worth $1 one year from now. Similarly, if I have to pay $1 two years from now, then the value of that payment today is 1/1.4^2, or $0.769. So for this problem you need to figure out the net present value of $2500 to be paid one year from now, plus the net present value of$2500 to be paid two years from now, plus... etc. Hope this helps.
|
||||
| Question Tools | Search this Question |
Add your answer here.
Check out some similar questions!
A project has estimated annual cash flows of $95,000 for four years and is estimated to cost $260,000. Assume a minimum acceptable rate of return of 12%. Below is a table for the present value of $1 at compound interest. Year 12% 1 .893 2 ...
(Ignore income taxes in this problem) The following data concern an investment project. Investment in requirement - $10000 Net annual cash inflows - $2400 Working capital required - $5000 Salvage value of equipment- $1000 Life of the project - 8 years Required rate of return - 10%...
Required rate of return is 16%, operating cash flow is 26000, working capital 3000, and expect operating cash flows of 26000 for 4years?
Caledonia is considering two additional mutually exclusive projects. The cash flows associated with these projects are as follows: Year Project A Project B 0 -$100,000 -$100,000 1 32,000 2 32,000 3 32,000 4 32,000 5 32,000 $200,000 a. What is each project’s payback period?
cpmpany Xis considering launching an inoovative producti.e glass used in TV sets company X has invested £500,000 to date in developing products the market research report commissioned by the firm indicates the product will have a 4year life the equipment required to manufacture the products...
View more questions Search
|
