Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

35.Fairfax Pizza is evaluating a project that would require an initial investment in equipment of 400,000 dollars and that is expected to last for 9

35.Fairfax Pizza is evaluating a project that would require an initial investment in equipment of 400,000 dollars and that is expected to last for 9 years. MACRS depreciation would be used where the depreciation rates in years 1, 2, 3, and 4 are 44 percent, 34 percent, 16 percent, and 6 percent, respectively. For each year of the project, Fairfax Pizza expects relevant, incremental annual revenue associated with the project to be 600,000 dollars and relevant, incremental annual costs associated with the project to be 520,000 dollars. The tax rate is 50 percent. What is (X plus Y) if X is the relevant operating cash flow (OCF) associated with the project expected in year 1 of the project and Y is the relevant OCF associated with the project expected in year 4 of the project?

40.For project A, the cash flow effect from the change in net working capital is expected to be -500 dollars at time 2, the level of net working capital is expected to be 1,200 dollars at time 0, and the level of net working capital is expected to be 1,800 dollars at time 2. What is the cash flow effect from the change in net working capital expected to be at time 1?

Only answers should be fine. Thank you! :)

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

QFinance The Ultimate Resource

Authors: Various Authors

1st Edition

1849300003, 978-1849300001

More Books

Students also viewed these Finance questions