1. Consider the following information from an income statement: Sales $583,936 379,904 86,400 Costs Depreciation Taxes 31% (a) calculate EBIT (b) calculate the net income (c) calculate the OCF. 615b6 31166 2. Consider an asset that costs $440,000 and is depreciated straight-line to zero over its 7-year tax life. The asset is to be used in a 5-year project; at the end of the project, the asset can be sold for $55,000. If the relevant tax rate is 32%, what is the after-tax cash flow from the sale of this asset? 3. Summer Tyme, Inc., is considering a new 5-year expansion project that requires an initial fixed asset investment of $2.916 million. The fixed asset will be depreciated straight-line to zero over its 5-year tax life, after which time it will be worthless. The project is estimated to generate $2,592,000 in annual sales, with costs of $1,036,800. If the tax rate is 33%, what is the OCF for this project? 4. Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.484 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $193,200. The project requires an initial investment in net working capital of $276,000. The project is estimated to generate $2,208,000 in annual sales, with costs of $883,200. The tax rate is 34% and the required return on the project is 14%. (a) what are the project's net cash flows at year 0, 1, 2, and 3, respectively. (b) what is the NPV? 5. What is the payback period for the following set of cash flows? 4 2,000 t-0 -$4,200 1,400 1,500 3,000 6. A project that provides annual cash flows of $14,300 for 6 years costs $57,165 today. (a) if the required return is 7%, what is the NPV for this project? (b) determine the IRR for the project. 7. Consider the following cash flows: t-0 -$7,200 3,100 5,600 5,500 (a) what is the Profitability Index for these cash flows if the relevant discount rate is 7%? 14%? (b) what is the IRR