Q1. A new project will generate sales of $74 million, costs of $42 million and depreciation expense of $10 million in the coming year. The firm's tax rate is %35. Calculate cash flow for the year by using all three methods discussed in the chapter, and confirm that they are equal. Q2: Canyon tours showed the following components of working capital last year: Beginning End of Year ACCOUNTS RECEIVABLE: $24,000 $23,000 INVENTORY: $12,000 $12,500 ACCOUNTS PAYABLE: $14,500 $16,500

a) What was the change in net working capital during the year?

b) If sales were $36,000 and costs were $24,000, what was cash flow for the year? Ignore taxes

Q3:CASH FLOWS. Tubby Toys estimates that its new line of rubber ducks will generate sales of $7 million, operating costs of $4 million, and a depreciation expense of $1 million. If the tax rate is 35%, What is the firm's operating cash flow? Show that you get the same answer using all three methods to calculate operating cash flow.

Q4: Role of the captal budget.. How does the capital budget help mitigate the folloeing potential problems?

a) Overoptimism by project sponsors.

b) Inconsistent forecasts of macroeconomic variables.

c)Capital budgeting organized solely as a bottom-up process.

Q5:Fixed and Variable Costs. In a slow year, Deutsche Burgers will produce 2 million hamburgers at a total cost of $3.5 million. In a good year, it can produce 4 million hamburgers at a total cost of $4.5 million. What are the fixed and variable costs of hamburger production?

Q6: Avarage cost. Reconsider Deutsche Burgers from Question 5 above.

a) What is the avarage cost per burger when the form produces 1 million hamburgers?

b)What is the acarage cost when the firm produces 2 million hamburgers?

c) Why is avarage cost lower when more burgers are produced?