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Could you please solve the below questions? these are finance related if you are in doubt on any question please mention it, 1)Calculate the relevant
Could you please solve the below questions? these are finance related if you are in doubt on any question please mention it,
1)Calculate the relevant cash flows (for each year) for the following capital budgeting proposal. Enter the total net cash flows for each year in the box below according to the provided format. $90,000 initial cost for machinery; depreciated straightline over 4 years to a book value of $10,000; 35% marginal tax rate; $55,000 additional annual revenues; $25,000 additional annual cash expense; annual expense for debt financing is $7,500. $3,500 previously spent for engineering study; The project requires inventory increase by $32,000 and accounts payable increase by $14,000 at the beginning of the project; The investment in working capital occurs one time at the beginning of the project and it requires working capital return to the original level when the project ends in 4 years; 11% cost of capital; life of the project is 4 years; and The new equipment will be sold at the end of 4 years; expected market value of the new equipment at the end of 4 years is $15,000; *For full credit please copy and paste any Excel tables you used to arrive at your answer. *Please show all calculations in excel table 2)You are analyzing a capital budgeting project and, as shown by ???, some numbers are unreadable. You can read the following information: Cash Flows at the end of: Year 0 = $25,000 Year 1 = +$8,000 Year 2 = +$ 6,000 Year 3 = +$ 2,600 Year 4 = $ ??? Year 5 = +$ 9,500 The Cost of Capital is 13%, the NPV = $5,650.01 and the IRR = ???%. Your superior, ignoring the important fact that we should reject the project, is demanding to know the Cash Flow in Year 4. Calculate the cash flow in Year 4. (format as $XX.XX) *Please show all calculations in excel table 3) We can continue to use an existing machine at a cost of $22,500 annually (aftertax cash basis, including depreciation tax benefits) for the next 4 years. Alternatively, we can purchase a new machine that has an expected life of 7 years for $45,000. The new machine is expected to cost $11,000 each year to operate (aftertax cash basis, including depreciation tax benefits). The new machine will reduce inventory needs by $5,000 starting immediately. This is a onetime reduction in inventory that will last for the entirety of the new machine's life. This reduction in inventory will be reversed at the end of 7 years. The cost of capital is 14%. The existing machine has no salvage value and we estimate that the new machine's salvage value will be 0 in 7 years. Should we purchase the new machine? In the box below, indicate your decision to replace or not replace, and provide support for your answer (i.e., indicate the criteria used to make the decision and the values for that criteria). Additional facts for this question: The existing machine has been fully depreciated. As stated, the $22,500 and $11,000 are annual aftertax cash operating costs (i.e., aftertax cash operating costs = net income + depreciation), thus no further adjustments need to be made to them for depreciation. *Please show all calculations in excel table 4) For the following project, calculate the NPV breakeven level of annual revenue, assuming that the operating cash flows will be stable for an 8 year horizon and that the discount rate is 12%. The project requires an initial investment of $600,000. Expected annual sales are $770,000. Annual fixed costs (excluding depreciation and any other non cash expenses) will be $100,000. Straightline depreciation of the initial investment over 8 years to a book value of 0. Variable costs (all of which are cash expenses) of 65% of revenues. Working capital will not be affected. Market values for salvage purposes in 8 years are estimated to be $40,000. 35% tax rate. NPV Breakeven revenue _____________________. (to nearest penny, XX.XX) *Please show all calculations in excel table Question 5 Which of the following would not be expected to affect the decision of whether to undertake an investment? Income tax rates Cost of capital Sales reductions in other products caused by this investment. Cost of the feasibility study which was conducted for a project. Question 6 The cost of capital does not reflect any market related risk of the project, or \"beta.\" True False Question 7 Which of the following statements is most correct? Sunk costs must be included in the project's cash flow. R&D expenditures cannot be a part of the initial cost of a project. Opportunity costs are sunk costs and therefore should not be included in the cost of the project. Depreciation is not a cash expense. All of the above statements are false. Question 8 Suppose the firm's cost of capital is stated in nominal terms, but the project's cash flows are expressed in real dollars. If a nominal rate is used to discount real cash flows and there is inflation (assume positive inflation), the calculated NPV would ..... be biased upward be biased downward be correct be possibly biased; either upward or downward none of the above 1)Calculate the relevant cash flows (for each year) for the following capital budgeting proposal. Enter the total net cash flows for each year in the box below according to the provided format. $90,000 initial cost for machinery; depreciated straightline over 4 years to a book value of $10,000; 35% marginal tax rate; $55,000 additional annual revenues; $25,000 additional annual cash expense; annual expense for debt financing is $7,500. $3,500 previously spent for engineering study; The project requires inventory increase by $32,000 and accounts payable increase by $14,000 at the beginning of the project; The investment in working capital occurs one time at the beginning of the project and it requires working capital return to the original level when the project ends in 4 years; 11% cost of capital; life of the project is 4 years; and The new equipment will be sold at the end of 4 years; expected market value of the new equipment at the end of 4 years is $15,000; *For full credit please copy and paste any Excel tables you used to arrive at your answer. *Please show all calculations in excel table 2)You are analyzing a capital budgeting project and, as shown by ???, some numbers are unreadable. You can read the following information: Cash Flows at the end of: Year 0 = $25,000 Year 1 = +$8,000 Year 2 = +$ 6,000 Year 3 = +$ 2,600 Year 4 = $ ??? Year 5 = +$ 9,500 The Cost of Capital is 13%, the NPV = $5,650.01 and the IRR = ???%. Your superior, ignoring the important fact that we should reject the project, is demanding to know the Cash Flow in Year 4. Calculate the cash flow in Year 4. (format as $XX.XX) *Please show all calculations in excel table 3) We can continue to use an existing machine at a cost of $22,500 annually (aftertax cash basis, including depreciation tax benefits) for the next 4 years. Alternatively, we can purchase a new machine that has an expected life of 7 years for $45,000. The new machine is expected to cost $11,000 each year to operate (aftertax cash basis, including depreciation tax benefits). The new machine will reduce inventory needs by $5,000 starting immediately. This is a onetime reduction in inventory that will last for the entirety of the new machine's life. This reduction in inventory will be reversed at the end of 7 years. The cost of capital is 14%. The existing machine has no salvage value and we estimate that the new machine's salvage value will be 0 in 7 years. Should we purchase the new machine? In the box below, indicate your decision to replace or not replace, and provide support for your answer (i.e., indicate the criteria used to make the decision and the values for that criteria). Additional facts for this question: The existing machine has been fully depreciated. As stated, the $22,500 and $11,000 are annual aftertax cash operating costs (i.e., aftertax cash operating costs = net income + depreciation), thus no further adjustments need to be made to them for depreciation. *Please show all calculations in excel table 4) For the following project, calculate the NPV breakeven level of annual revenue, assuming that the operating cash flows will be stable for an 8 year horizon and that the discount rate is 12%. The project requires an initial investment of $600,000. Expected annual sales are $770,000. Annual fixed costs (excluding depreciation and any other non cash expenses) will be $100,000. Straightline depreciation of the initial investment over 8 years to a book value of 0. Variable costs (all of which are cash expenses) of 65% of revenues. Working capital will not be affected. Market values for salvage purposes in 8 years are estimated to be $40,000. 35% tax rate. NPV Breakeven revenue _____________________. (to nearest penny, XX.XX) *Please show all calculations in excel table Question 5 Which of the following would not be expected to affect the decision of whether to undertake an investment? Income tax rates Cost of capital Sales reductions in other products caused by this investment. Cost of the feasibility study which was conducted for a project. Question 6 The cost of capital does not reflect any market related risk of the project, or \"beta.\" True False Question 7 Which of the following statements is most correct? Sunk costs must be included in the project's cash flow. R&D expenditures cannot be a part of the initial cost of a project. Opportunity costs are sunk costs and therefore should not be included in the cost of the project. Depreciation is not a cash expense. All of the above statements are false. Question 8 Suppose the firm's cost of capital is stated in nominal terms, but the project's cash flows are expressed in real dollars. If a nominal rate is used to discount real cash flows and there is inflation (assume positive inflation), the calculated NPV would ..... be biased upward be biased downward be correct be possibly biased; either upward or downward none of the aboveStep by Step Solution
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