As the result of purchasing new equipment costing $760,000,ABC Inc. expects the number of units it produces and sales will increase next year by 18%. This past year the firm sold 75 units at a price of $14,000 per unit and the cost to manufacture each unit was $2,500. ABC is in a 40% tax bracket. Assuming there are no other expenses, what is the expected incremental cash flow from operations next year? We ignore the impact of CCA and depreciation. a. $610,650 b. $71,654 c. $93,150 d. $155,250 e. $1,017,750 ABC Inc. will be growing its business in the coming year. This will result in an increase in inventory of $11,800; an increase in property, plant, and equipment of $42,800; an increase in accounts payable of $2,700 All other accounts will remain unchanged. The change in net working capital resulting from this growth is: a. $14,500 b. $9,100 c. $51,900 d. $31,000 e. $28,300 Calculate the present value of the tax shields due to CCA of the following equipment: Acquisition cost is $1,214,000;the expected economic life is 9 years; the expected salvage value is $242,000; the CCA rate is 20%; the discount rate is 8.30% and the marginal tax rate is 30%. Assume that the half-year rule applies. a. $314,821 b. $222,489 c. $247,522 d. $350,244 e. $202,262 Today ABC Corp. starts a project that requires it to invest in new equipment of $890,000. Doing so will earn ABC pre-tax cash flows of $159,000 annually over 10 years. The equipment has a salvage value of $272,000. ABC's cost of capital is 8.20%, and its tax rate is 40%. The equipment falls into the 30% CCA class (half year rule applies). What is the NPV of the project? a. $98,221 b. $137,073 c. $25,458 d. $230,135 e. $131,914 As the result of purchasing new equipment costing $760,000,ABC Inc. expects the number of units it produces and sales will increase next year by 18%. This past year the firm sold 75 units at a price of $14,000 per unit and the cost to manufacture each unit was $2,500. ABC is in a 40% tax bracket. Assuming there are no other expenses, what is the expected incremental cash flow from operations next year? We ignore the impact of CCA and depreciation. a. $610,650 b. $71,654 c. $93,150 d. $155,250 e. $1,017,750 ABC Inc. will be growing its business in the coming year. This will result in an increase in inventory of $11,800; an increase in property, plant, and equipment of $42,800; an increase in accounts payable of $2,700 All other accounts will remain unchanged. The change in net working capital resulting from this growth is: a. $14,500 b. $9,100 c. $51,900 d. $31,000 e. $28,300 Calculate the present value of the tax shields due to CCA of the following equipment: Acquisition cost is $1,214,000;the expected economic life is 9 years; the expected salvage value is $242,000; the CCA rate is 20%; the discount rate is 8.30% and the marginal tax rate is 30%. Assume that the half-year rule applies. a. $314,821 b. $222,489 c. $247,522 d. $350,244 e. $202,262 Today ABC Corp. starts a project that requires it to invest in new equipment of $890,000. Doing so will earn ABC pre-tax cash flows of $159,000 annually over 10 years. The equipment has a salvage value of $272,000. ABC's cost of capital is 8.20%, and its tax rate is 40%. The equipment falls into the 30% CCA class (half year rule applies). What is the NPV of the project? a. $98,221 b. $137,073 c. $25,458 d. $230,135 e. $131,914