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calculate the answer for each question The company uses straight-line depreciation method for accounting and tax purposes. Required: a. Calculate the net after-tax cash flow

calculate the answer for each question

image text in transcribedimage text in transcribedimage text in transcribed The company uses straight-line depreciation method for accounting and tax purposes. Required: a. Calculate the net after-tax cash flow per year from the investment opportunity. b. Calculate the net present value of the investment opportunity. From the company's viewpoint, should the project be accepted? c. Calculate ROI of the dishwasher division before and after the investment opportunity. Will Wendy accept the project? Why? Note: ROI= Income before taxes/Net asset base d. Calculate RI of the dishwasher division before and after the investment opportunity. Will Wendy accept the project? Why? Note: RI= Income before taxes - Net asset base * Required rate of return e. Paul Hogworth is manager of the Refrigerator Division. His division has been presented with an investment opportunity with a significantly positive NPV. The initial investment required is also $1.5 million and the cash inflows from the project begin in the third year. Paul is planning to retire in three years. Will he accept the project? Why/Why not? f. How can Kitchen Appliances Inc. ensure that divisional managers accept positive NPV projects? Kitchen Appliances, Inc., is a multi-division company with each major product line managed by a separate division. Divisional managers have complete autonomy with respect to operating and investment decisions. The company evaluates its division managers on ROI, calculated as operating income before taxes divided by net book value of assets. The firm pays particular attention to year-over-year growth in ROI as well as budget-actual comparison of the measure. Wendy Miller is the manager of the Dishwasher Division. Wendy expects that the income for the current year will be $2,400,000 before taxes on a net asset base of $6,800,000. This performance has been fairly representative of the way things have been going for Wendy. She expects a similar performance next year as well and is looking forward to her promotion into the C-suite (the corporate office). Toward the end of the current year, an investment opportunity (project) arises for Wendy- the possibility of introducing a new dishwasher model with improved features. The following table presents some salient financial information that Wendy's managers put together for her evaluation: The company uses straight-line depreciation method for accounting and tax purposes

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