[johnsmith1233]

You are analyzing the operating cash flow for a proposed project. The equipment has a depreciable life of 6 years; the proposed project life is 8 years. All revenue and operating expenses will remain constant. One analyst says the OCF will remain constant over the 8 year proposed project life. Your boss asks your opinion and you say ____ because _____.
A. Yes; the revenue and operating expenses are constant
B. No; OCF will change the last two years because of reduced non-cash expenses
C. Maybe; cash expenses should be collected for years 7 and 8 changing the OCF

I THINK THE ANSWER IS C. CAN SOMEONE GIVE ME INPUT?

[johnsmith1233]

A friend asked you to help him determine the operating cash flow for a new drink business at padre island for spring break and he needs to take the NPV analysis to a bank for financing. He gives you the following numbers and asks which ones should be included in the NPV analysis: Labor = $1,000; utilities = $1,000; Expected Interest on Loan = $1,000; Trip to padre Island last year to talk business with a sail boat rental agency (where he got the idea for the drink business) = $500; insurance = $1,000; building rental = $1,000; other operating expenses = $1,000; You say ____ because ____.
A. exclude interest; it is included in the discount rate
B. exclude trip; the money has already been spent on another project
c. exclude building rental; the business would need to be put someplace an it is a wash.
d. both A and B

I THINK THE ANSWER IS A.
CAN SOMEONE HELP

[johnsmith1233]

The estimated proposed project cash flows the owners will receive after everyone has been paid is the __________cash flow
a. after-tax
b. net income
c. net income after interest expense

I THINK THIS IS EITHER B OR C

[johnsmith1233]

In projected loss on the sale of an asset, you would rather carry the loss_____ because _______.
a. back; of easier accounting
b. of time value of money

I THINK THIS IS A. AM IS CORRECT?

[johnsmith1233]

Which of the following is a pitfall of the payback rule?
a. It gives equal weight to cash flows before cutoff
b.it ignores cash flows after cutoff
c.it biases the firm against long term projects that might be very profitable
d.all the above are pitfalls

I THINK THIS IS A
CAN SOMEONE HELP

[johnsmith1233]

A proposed project’s cash slow are calculated on an after-tax basis because __________.
A. It is the only time the owners can get their hands on the cash
B. Its is only related to the proposed project
C. It is best for replacement projects

CAN SOMEONE HELP
I THINK THE ANSWER IS B

[johnsmith1233]

Why is it important for a proposed project to earn at least the WACC?
A. Most of the II recouped
B. Wealth will be added
C. Equity and debt investors will receive the return they require
D. Operating cash flows are never negative

CAN SOMEONE HELP

[ArcSine]

JS, you've read the homework help rules, but here's the gist: Explain your reasoning behind your proposed answers, or explain in detail what part is confusing you, and then someone here can provide guidance to steer you in the right direction.