Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1) First, what is the annual operating cash flow of the project for year 1? 2) What is the annual operating cash flow of the

image text in transcribedimage text in transcribed

1) First, what is the annual operating cash flow of the project for year 1?

2) What is the annual operating cash flow of the project for year 2?

3) What is the annual operating cash flow of the project for year 3?

4) What is the annual operating cash flow of the project for year 4?

5) What is the annual operating cash flow of the project for year 5?

6) Next, what is the after-tax cash flow of the equipment at disposal?

7) Then, what is the incremental cash flow of the project in year 0?

8) What is the incremental cash flow of the project in year 1?

9) What is the incremental cash flow of the project in year 2?

10) What is the incremental cash flow of the project in year 3?

11) What is the incremental cash flow of the project in year 4?

12) What is the incremental cash flow of the project in year 5?

13) So, what is the IRR of the project?

Score: 0 of 1 pt 14 of 14 (10 complete) Hw Score: 62.5%, 8.75 of 14 pts P10-20 (similar to) Question Help Project cash flow and NPV. The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds (1957 replicas). The necessary foundry equipment will cost a total of $4,200,000 and will be depreciated using a five-year MACRS life, EEB. The sales manager has an estimate for the sale of the classic Thunderbirds. The annual sales volume will be as follows: Year one: 240 Year two: 280 Year three: 360 Year four: 370 Year five: 330 If the sales price is $27,000 per car, variable costs are $18,000 per car, and fixed costs are $1,400,000 annually, what is the annual operating cash flow if the tax rate is 30%? The equipment is sold for salvage for S500,000 at the end of year five. Net working capital increases by $500,000 at the beginning of the project (year 0) and is reduced back to its original level in the final year. Find the internal rate of return for the project using the incremental cash flows

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Money Banking And Financial Markets

Authors: Laurence Ball

1st Edition

0716759349, 9780716759348

More Books

Students also viewed these Finance questions

Question

Discuss the steps in the development planning process. page 399

Answered: 1 week ago

Question

Identify the cause of a performance problem. page 380

Answered: 1 week ago