1 Interest Expense is a type of incremental cash flow that should be included in all capital budgeting decisions True False 1 points QUESTION 2 Which ofthefollowingcalculatestheeffectontheNPV of changesinoneoutputvariableatatime MonteCaroSimulation ProfitabilityIndex OpportunityAnalysis Sensitivity analysis Scenarioanalysis 1 points QUESTION 3 ABC, Incis considering the purchase of a new equipment The equipment costs $16,507 and an additional $4,086 is needed to install it The project will also require an initial $4,493 investment in net working capital The equipment will be depreciated straight line to zero over a five year life What is the project's initial investment outlay Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 4 ABC, Inc is considering purchaseof a new equipment The sales are expected to be $807,877 and the total cash expenses are expected to be $441,294 The annual depreciation is $77,337 and the tax rate is 37 What is the operating cash flow Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 5 Which of the following cash flows are NOT considered in the calculation of the initial outlay for a capital investment proposal Sunk costs All of the above should be considered Cost of Installing new equipment Increase in net working capital requirements After taxsalvagevalueofoldequipment 1 points QUESTION 6 A project requires $82,541 of equipment that is classified as 7 year property What is the book value of this asset at the end of year 3 given the following MACRS depreciation allowances, starting with year one 14 29, 24 49, 17 49, 12 49, 8 93, 8 92, 8 93, and 4 46 percent Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 7 ABC Company has a proposed project that will generate sales of 267 units annually at a selling price of $231 each The fixed costs are $5,251 and the variable costs per unit are $120 The project requires $14,339 of equipment that will be depreciated on a straight line basis to a zero book value over the 9 year life of the project That is, depreciation each year is $14,339 9 The tax rate is 25 percent What is the operating cash flow Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 8 A project has an initial requirement of $185,162 for new equipment and $11,148 for net working capital The installation costs to get the new equipment in working condition are 8,501 The fixed assets will be depreciated to a zero book value over the 5 year life of the project and have an estimated salvage value of $124,716 All of the net working capital will be recouped at the end of the project The annual operating cash flow is $85,420 and the cost of capital is 13 What is the project's NPV if the tax rate is 39 Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 9 A project requires $16,137 of equipment that is classified as 7 year property What is the book value of this asset at the end of year 5 given the following MACRS depreciation allowances, starting with year one 14 29, 24 49, 17 49, 12 49, 8 93, 8 92, 8 93, and 4 46 percent Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 10 A project has an initial requirement of $239,627 for new equipment and $11,405 for net working capital The installation costs are expected to be $16,625 The fixed assets will be depreciated to a zero book value over the 4 year life of the project and have an estimated salvage value of $75,165 All of the net working capital will be recouped at the end of the project The annual operating cash flow is $72,444 and the cost of capital is 6 What is the project's NPV if the tax rate is 29 Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35in the answer box 1 points QUESTION 11 ABC Company purchased $89,417 of equipment 4 years ago The equipment is 7 year MACRS property The firm is selling this equipment today for $3,307 What is the After taxSalvage Value if the tax rate is 15 The MACRS allowance percentages are as follows, commencing with year one 14 29, 24 49, 17 49, 12 49, 8 93, 8 92, 8 93, and 4 46 percent Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 12 ABC, Inc is considering the purchase of new equipment The annual sales are expected to be $555,264, the annual variable costsare expected to be $68,102, the annual fixed costs are expected to be $68,946, the annual depreciation expenses are expected to be $87,974 Assuming a tax rate of 32 8 , what is the operating cash flow Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 13 ABC Company purchased$56,449of equipment5years ago The equipment is7 year MACRS property The firm is selling this equipment today for$9,553 What is the After taxSalvageValueif the tax rate is28percent The MACRS allowance percentages are as follows,commencing with year one 14 29,24 49,17 49,12 49,8 93,8 92,8 93,and4 46percent Enter your answer rounded off to two decimal points Do not enter$or comma in the answer box For example,if your answer is$12 345then enter as12 35in the answer box 1 points QUESTION 14 A project requires$345,084of equipment that is classified as7 year property What is the depreciation expense in Year5given the following MACRS depreciation allowances,starting with year one 14 29,24 49,17 49,12 49,8 93,8 92,8 93,and4 46percent Enter your answer rounded off to two decimal points Do not enter$or comma in the answer box For example,if your answer is$12 345then enter as12 35in the answer box 1 points QUESTION 15 ABC,Inc purchased some new machinerythreeyears ago for$150,030 Today,it is selling this machinery for$27,094 What is the After tax Salvage Value ofthenewmachinery Assumethat thetax rate is27 The MACRS allowance percentages are as follows,starting with Year1 20 00,32 00,19 20,11 52,11 52,and5 76percent Enter your answer rounded off to two decimal points Do not enter$or comma in the answer box For example,if your answer is$12 345then enter as12 35in the answer box 1 points QUESTION 16 ABC, Inc is planning the purchase of a new equipment which will cost $27,544 The project is expected to last for 7 years Theequipment will have a book value of $3,880 at the end of Year 7 The increase in net working capital is expected to be $2,334, all of which will be recouped at the end of the project The project is expected to have annual operating cash flows of $14,412 What is the Total Cash Flow in Year 7 of the project if the equipment can be sold for $6,932 and the tax rate is 25 Note In the last year of the project, the Total Cash Flow Operating Cash Flow Terminal Cash Flow Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 17 ABC, Inc , is consideringpurchase of a new equipment The expected sales are expected to be $5,803,476 The annual cash operating expenses are expected to be $2,538,103 The annual depreciation is estimated to be $427,170 and the interest expense is estimated to be $134,420 If the tax rate is 38 , what is the operating cash flow Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 18 ABC,Inc is planning the purchase of new equipment that costs $128,419 The project is expected to last for 13 years Each year, the new project is expected to sell 129 units for $364 per unit The variable costs are expected to $69 per unit and the fixed costs are expected to be $18,583 The equipment will be depreciated on a straight line basis over the 13 year life of the project That is, the depreciation each year will be $128,419 13 Assuming a tax rate of 34 , what is the operating cash flow Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box

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1 Interest Expense is a type of incremental cash flow that should be included in all capital-budgeting decisions. True False 1 points QUESTION 2 Which

Interest Expense is a type of incremental cash flow that should be included in all capital-budgeting decisions.
True
False

1 points

QUESTION 2

Which ofthefollowingcalculatestheeffectontheNPV of changesinoneoutputvariableatatime?
MonteCaroSimulation
ProfitabilityIndex
OpportunityAnalysis
Sensitivity analysis
Scenarioanalysis

1 points

QUESTION 3

ABC, Incis considering the purchase of a new equipment. The equipment costs $16,507 and an additional $4,086 is needed to install it. The project will also require an initial $4,493 investment in net working capital. The equipment will be depreciated straight-line to zero over a five-year life. What is the project's initial investment outlay?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 4

ABC, Inc. is considering purchaseof a new equipment. The sales are expected to be $807,877 and the total cash expenses are expected to be $441,294. The annual depreciation is $77,337 and the tax rate is 37%. What is the operating cash flow?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 5

Which of the following cash flows are NOT considered in the calculation of the initial outlay for a capital investment proposal?
Sunk costs
All of the above should be considered
Cost of Installing new equipment
Increase in net working capital requirements
After-taxsalvagevalueofoldequipment

1 points

QUESTION 6

A project requires $82,541 of equipment that is classified as 7-year property. What is the book value of this asset at the end of year 3 given the following MACRS depreciation allowances, starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 7

ABC Company has a proposed project that will generate sales of 267 units annually at a selling price of $231 each. The fixed costs are $5,251 and the variable costs per unit are $120. The project requires $14,339 of equipment that will be depreciated on a straight-line basis to a zero book value over the 9-year life of the project. That is, depreciation each year is $14,339/9. The tax rate is 25 percent.What is the operating cash flow?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 8

A project has an initial requirement of $185,162 for new equipment and $11,148 for net working capital. The installation costs to get the new equipment in working condition are 8,501. The fixed assets will be depreciated to a zero book value over the 5-year life of the project and have an estimated salvage value of $124,716. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $85,420 and the cost of capital is 13% What is the project's NPV if the tax rate is 39%?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 9

A project requires $16,137 of equipment that is classified as 7-year property. What is the book value of this asset at the end of year 5 given the following MACRS depreciation allowances, starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 10

A project has an initial requirement of $239,627 for new equipment and $11,405 for net working capital. The installation costs are expected to be $16,625. The fixed assets will be depreciated to a zero book value over the 4-year life of the project and have an estimated salvage value of $75,165. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $72,444 and the cost of capital is 6% What is the project's NPV if the tax rate is 29%?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35in the answer box.

1 points

QUESTION 11

ABC Company purchased $89,417 of equipment 4 years ago. The equipment is 7-year MACRS property. The firm is selling this equipment today for $3,307. What is the After-taxSalvage Value if the tax rate is 15%?
The MACRS allowance percentages are as follows, commencing with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent.
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 12

ABC, Inc. is considering the purchase of new equipment. The annual sales are expected to be $555,264, the annual variable costsare expected to be $68,102, the annual fixed costs are expected to be $68,946, the annual depreciation expenses are expected to be $87,974. Assuming a tax rate of 32.8%, what is the operating cash flow?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 13

ABC Company purchased$56,449of equipment5years ago.The equipment is7-year MACRS property.The firm is selling this equipment today for$9,553.What is the After-taxSalvageValueif the tax rate is28percent?The MACRS allowance percentages are as follows,commencing with year one:14.29,24.49,17.49,12.49,8.93,8.92,8.93,and4.46percent.
Enter your answer rounded off to two decimal points.Do not enter$or comma in the answer box.For example,if your answer is$12.345then enter as12.35in the answer box.

1 points

QUESTION 14

A project requires$345,084of equipment that is classified as7-year property.What is the depreciation expense in Year5given the following MACRS depreciation allowances,starting with year one:14.29,24.49,17.49,12.49,8.93,8.92,8.93,and4.46percent?
Enter your answer rounded off to two decimal points.Do not enter$or comma in the answer box.For example,if your answer is$12.345then enter as12.35in the answer box.

1 points

QUESTION 15

ABC,Inc purchased some new machinerythreeyears ago for$150,030.Today,it is selling this machinery for$27,094.What is the After-tax Salvage Value ofthenewmachinery?Assumethat thetax rate is27%.
The MACRS allowance percentages are as follows,starting with Year1:20.00,32.00,19.20,11.52,11.52,and5.76percent.
Enter your answer rounded off to two decimal points.Do not enter$or comma in the answer box.For example,if your answer is$12.345then enter as12.35in the answer box.

1 points

QUESTION 16

ABC, Inc is planning the purchase of a new equipment which will cost $27,544. The project is expected to last for 7 years. Theequipment will have a book value of $3,880 at the end of Year 7.The increase in net working capital is expected to be $2,334, all of which will be recouped at the end of the project. The project is expected to have annual operating cash flows of $14,412.What is the Total Cash Flow in Year 7 of the project if the equipment can be sold for $6,932 and the tax rate is 25%?
Note: In the last year of the project, the Total Cash Flow = Operating Cash Flow + Terminal Cash Flow
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 17

ABC, Inc., is consideringpurchase of a new equipment. The expected sales are expected to be $5,803,476. The annual cash operating expenses are expected to be $2,538,103. The annual depreciation is estimated to be $427,170 and the interest expense is estimated to be $134,420. If the tax rate is 38%, what is the operating cash flow?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 18

ABC,Inc is planning the purchase of new equipment that costs $128,419. The project is expected to last for 13 years. Each year, the new project is expected to sell 129 units for $364 per unit. The variable costs are expected to $69 per unit and the fixed costs are expected to be $18,583. The equipment will be depreciated on a straight-line basis over the 13-year life of the project.That is, the depreciation each year will be $128,419/13. Assuming a tax rate of34%, what is the operating cash flow?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.