Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

LOL Ltd is a mining company and is evaluating a new plant for a coal mine. The plant project will last for ten years and

LOL Ltd is a mining company and is evaluating a new plant for a coal mine. The plant project will last for ten years and LOL has been given the following estimates that relate to running the new plant. The new plant will cost $330,000. The plant will have no value in ten years time. LOL depreciates all assets over a ten year life span. The taxation office has provided advice to LOL that the plant are depreciated over 20 years. The project will require an investment in inventory of $290,000 at the start of the project. The interest on the loan is $28,000 per year. The company pays dividends of $200,000 per year. The company tax rate is 30%. What is the total cash flow at the end of the project (report your answer to the nearest dollar)?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management Principles and Applications

Authors: Sheridan Titman, Arthur Keown, John Martin

12th edition

133423824, 978-0133423822

More Books

Students also viewed these Finance questions

Question

4 The organization must make sure assumptions continue to hold.

Answered: 1 week ago