Question
NEED HELP FOR BELOW FEW MC QUESTIONS: 1.Tech Enterprises is considering a new project that will require $325,000 for fixed assets, $160,000 for inventory, and
NEED HELP FOR BELOW FEW MC QUESTIONS:
1.Tech Enterprises is considering a new project that will require $325,000 for fixed assets, $160,000 for inventory, and $35,000 for accounts receivable. Accounts payable and accruals areexpected to increase by $100,000 in total. The project has a 5-year life. The fixed assets will be depreciated straight-line to a zero book value over the life of the project. At the end of the project, the fixed assets can be sold for 25 percent of their original cost and the net working capital will return to its original level before the project. The project is expected to generate annual sales of $554,000 and costs of $430,000. The tax rate is 35 percent and the required rate of return is 15 percent. What is the net present value of this project?
A.$6,202.48
B.$4,138.25
C.$2,318.29
D.$3,026.45
E.$65.83
2. The By-Way Co. has sales of $435,000, costs of $254,000, depreciation of $35,000, interest expense of $22,000, and taxes of $43,400. What is the amount of the company'soperating cash flow?
A.$114,340
B.$157,900
C.$322,100
D.$137,600
E.$115,600
3. Thornley Machines is considering a 3-year project with an initial cost for fixed assets of $618,000. The project will reduce operating costs by $265,000 a year. The equipment will be depreciated straight-line to a zero book value over the life of the project. At the end of the project, the equipment will be sold for an estimated $60,000. The tax rate is 34 percent. The project will require $23,000 in extra inventory at the beginning of its life. What is the NPV if the discount rate assigned to the project is 14 percent?
A.$32,593.78
B.$16,884.40
C.$30,086.23
D.$43,106.54
E.$2,646.00
4. As the winner of a contest, you are now CFO for the day for Maguire Inc. and your day's job involves raising capital for expansion. Maguire's common stock currently sells for $45.00 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate in dividendsis 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. What is the company's cost of newly issued equity?
A.9.19%
B.11.56%
C.10.65%
D.8.84%
E.10.28%
5. Other things remaining the same, theinternal rate of return (IRR)for a project will increase if:
A.the total amount of the cash inflows is reduced.
B.the discount rate is increased.
C.the initial cost of the project can be reduced.
D.each cash inflow is moved such that it occurs one year later than originally projected.
E.the required rate of return is reduced.
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