Figure 2: financial data

First year revenues: $11000

Second year revenues: $15000

Expenses (including depreciation): $100,000 per year

Initial time-zero (net) fixed assets: $40000

Depreciation: 10% of beginning of year net fixed assets

Accounts payable (year 1 and 2): $500

Corporate marginal tax: 30%

Accurred expenses (year 1 and 2): $100

Required cash: $2000

What is the accumulated depreciation in year 1 and 2:

(a) -$0 & -$4000

(b) -$6000 & 0

(c) -$4000 & $3600

(d) -$4000 & -$7600

(e) -$5000 & $7400

Correct answers: (d)

What is the ventures Total Assets in year 0, 1 & 2:

(a) $30000 & -$60800 & -$168400

(b) $0 & -$40000 & -$130400

(c) $40000 & -$48400 & -$133400

(d) $40000 & -$58400 & -$128400

(e) $40000 & -$40400 & -$130400

Correct answers: (c)

What is the surplus cash for year 1 and 2:

(a) -$46400 & -$176800

(b) -$86400 & -$167800

(c) -$89350 & -$145450

(d) -$86400 & -$166800

(e) -$40000 & -$166800

Correct answers: (b)

Using a 30% discount rate for the first two years and a $2000000 terminal value, what is the value of the venture at its launch:

(a) NPV=$1000735,4

(b) NPV=$1008652,8

(c) NPV=$1028804,8

(d) NPV=-$1028804,8

(e) NPV=$1068604,4

Correct answers: (c)