15. The determination of net cash flows (NCF) should NEVER include a. changes in depreciation b. changes in operating costs c. interest charges d. indirect effects 21. In estimating the net investment, an outlay that has already been made is known as an) asunk cost b. cash outflow 6. opportunity cost d. expansion cost 28. Depreciation a does not affect cash flows b. does not affect profits c. is not a cash outflow d. is a cash inflow 35. The total accumulated networking capital of a project is normally recovered in the project's_ year. a. last b. first c. second d. second to last 41. A drill press costs $30,000 and is expected to have a 10-year life. The drill press will be depreciated on a straight-line basis over 10 years to a zero estimated salvage value. This machine is expected to reduce the firm's cash operating costs by S4,500 per year. Assuming the firm is in the 40 percent marginal tax bracket, determine the annual net cash flows generated by the drill press a $4.500 b. 5200 c. 55,700 d. S3,900 42. An investment project is expected to generate earnings before taxes (EBT) of $60,000 per year. Annual depreciation from the project is $30,000, and the firm's tax rate is 40 percent. Determine the project's annual net cash flows. a. 48,000 b. 566,000 c. $36.000 d. SS2.000 47. Shunt Technology will spend $800,000 on a piece of equipment that will manufacture fine wire for the electronics industries. The shipping and installation charges will be $240,000 and networking capital will increase $48,000. The equipment will replace an existing machine that has a salvage value of $75.000 and a book value of $125,000. If Shunt has a current marginal tax rate of 34 percent, what is the net investment a $1,030,000 b. 51.163.000 51,033,000 d. 5996,000 63. Felix Industries purchased a grinder 5 years ago for $15.000. It is being deprecated on a straight-line basis over 15 years to an estimated alage value of It could be sold now for $6.000. The firm is considering selling it and purchasing a new one. The new grinder would cost $25.000 stalled and would be deprecated on a straight-line basis over 10 years to a zero estimated salvage value. The company's marginal tax rate is 10%. Determine the net investment if the old grinder is sold and the new one purchased a $19.000 $16,600 c. $17,400 d. cannot be computed 91. There are four ways tax consequences may affect the after-tax et proceeds received from the sale of an asset Describe the four ways and the tax impact
