9- Thomson Media is considering some new equipment whose data are shown below. The equipment has a 3-year tax life. Under the new tax law, the equipment is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. The equipment would have a positive pre-tax salvage value at the end of Year 3, when the project would be closed down. Also, additional net operating working capital (NOWC) would be required, but it would be recovered at the end of the project's life. Revenues and operating costs are expected to be constant over the project's 3-year life. What is the project's NPV? Do not round the intermediate calculations and round the final answer to the nearest whole number. WACC Equipment cost Required net operating working capital (NOWC) 10.0% $70,000 $10,000 Annual sales revenues Annual operating costs Expected pre-tax salvage value Tax rate $61,000 $30,000 $5,000 25.0% a. 55,650 b. 5378 c. $344 d. 58,521 e. $2,543 10. Florida Car Wash is considering a new project whose data are shown below. The equipment to be used has a 3-year tax life. Under the new tax law, the equipment is eligible for 100% bonus depreciation, so it will be fully depreciated at t=0. At the end of the project's 3-year life, it would have zero salvage value. No change in net operating working capital (NOWC) would be required for the project. Revenues and operating costs will be constant over the project's life, and this is just one of the firm's many projects, so any losses on it can be used to offset profits in other units. If the number of cars washed declined by 40% from the expected level, by how much would the project's NPV change? (Hint: Note that cash flows are constant at the Year 1 level, whatever that level is.) Do not round the intermediate calculations and round the final answer to the nearest whole number. WACC Equipmentsost Number of cars washed Average price per car Fixed op. cost Variable op. cost/unit (i.e., VC per car washed) 10.0% $60,000 2,960 $25.00 $10,000 $5.375 25.0% Tax rate a. -543,339 b. -$33,804 c. -$28,170 d. -$46,199 e. -536,433 12- Calculate below project Expected NPV. What is the project Standard Deviation? What is the project Coefficient of Variance.? (Scenario Analysis) Probability NPV 25% 50% 25% Predicted cash flow for each year 0 2 3 4 WACC 4 -$750 $3300 $3131 S2920 $2637 7.5% -$1000 $500 $400 $300 $100 -$1250 $-$1530 -$1579 -$1602 -$1708 12.5% Expected NPV Standard Deviation Coefficient of Variation (CV): Std Dev /Expected NPV