A project requires an investment in fixed asset of $1,400,000. This cost will be depreciated straight-line to zero over the project's ten-year life. The project will save the firm $240, 000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $100,000. Tax rate is 20% and the discount rate is 8%. 16. What is the project's OCF? A) $140,000 C) $192,000 B) $240,000 D) $220,000 A project requires an investment in fixed asset of $1,400,000. This cost will be depreciated straight-line to zero over the project's ten-year life. The project will save the firm $240,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $100,000. Tax rate is 20% and the discount rate is 8%. 17. What is the project's NPV? A) -$12,849.33 C) $25,583.20 B) $22,537.26 D) $28,500.00 18. A proposed new project requires an initial investment of $480,000, which will be depreciated over 12 years. The project is expected to generate annual sales of $60,000 with the variable costs of $20,000 and fixed costs of $5,000. What is the project's OCF assuming a tax rate of 20%? A) $48,000 C) $36,000 B) $24,000 D) $28,000 19. Suppose a company has total long-term capital of $489,000; of which, S150,000 is long-term debt, S54,000 is preferred stock and the rest is common equity. What is the WACC if cost of debt is 6%, cost of preferred stock is 8% and cost of equity is 11%. Tax rate = 20%. A) 8.77% C) 7.85% B) 9.46% D) 10.23% 20. NPV and IRR can be in conflict when: A. evaluating independent projects B. evaluating mutually exclusive projects C. evaluating new expansion projects D. all of the above