QUESTION 7 10 points 10 points Save Answer The term 'cannibalization' refers to decrease in the sales of current projects caused by the launching of a new project decreased productivity of managers who need to shift attention to help with the launch of a new project decrease in overhead expenses incurred due to the launch of a new project decrease in the sunk cost caused by the launching of a new project QUESTIONS 10 points 10 points Save Answer After 5 years of use, Hertz sells their rental cars. After 5 years, the book value of each car is $5,000. Hertz expects to sell these cars for $6,000 each. The tax rate for Hertz is 25%. What is the after tax salvage value for each rental car? 5,750 750 5,000 6,000 QUESTIONS 10 points Save Answer You see a good deal online and buy 10 laptops for $1000 each (t = 0). You plan to resell these laptops for $2,000 each. You will sell 5 laptops a year for the next two years. Your tax rate is 15%. What are your FCF at i = 0,1, and 2. (Hint: look at inventory example in the lecture notes) -10,000; 8,500; 8,500 -10,000; 10,000; 10,000 -10,000; 9,250; 9,250 -10,000; 5,000; 5,000 QUESTION 10 10 points Save Answer Southwest Airlines wants to increase their fleet by 10 planes. Each plane will cost $18 M. They expect that the increase in EBITDA from these planes will start at $55 M per year and grow at 4% per year. These planes will be in service for 6 years, so Southwest Airlines will depreciate the plane on a straight line basis (to 0) over these 6 years. The networking capital required for each plane starts at $0.3 M (t=0) for a total of $3 M and is expected to increase at 6% per year. At the end of the 6 years, Southwest will be able to sell the planes back to the manufacturer for $2 M per plane. If Southwest airlines has a tax rate of 18% and a discount rate of 10%, what is the NPV of this project? (Hint1: make your own excel model for this based on the lecture notes. Hint2: don't forget salvage value and nwc recovery.) (Answer in Millions. Ex for 93,310,000, put 93.31)