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Kramerica Industries, has estimated the following revenues and expenses related to phase 1 of a proposed new housing development. Incremental sales= $5,000,000, total cash operating
Kramerica Industries, has estimated the following revenues and expenses related to phase 1 of a proposed new housing development. Incremental sales= $5,000,000, total cash operating expenses $3,500,000, depreciation $500,000, taxes 35%, interest expense, $200,000. Operating cash flow equals $1,150,000 O $650,000 $975,000 $1,000,000 QUESTION 5 Consider a firm in Los Angeles that is evaluating two projects. The first project is an expansion to open a theme park. The second project is to build a larger and more updated movie studio in a different location. The movie studio will cost $790 million dollars in the first year, but is projected to earn either $1 million or spend an additional $2 million in alternating years for the next 7 years until the studio gains popularity. The movie studio project is said to have Nondependent cash flows Mutually exclusive cash flows Idiosyncratic cash flows Non-normal cash flows Normal cash flows
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