Suppose your company needs $15 million to build a new assembly line. Your target debt-equity ratio is 0.90. The flotation cost for new equity is 10 percent, but the flotation cost for debt is only 4 percent. What is the true cost of building the new assembly line after taking flotation costs into account? Select the range that includes the correct answer. Less than $16,000,000 Greater than or equal to $16,000,000 but less than $16,100,000 Greater than or equal to $16,100,000 but less than $16,200,000 Greater than or equal to $16,200,000 but less than $16,300,000 Greater than or equal to $16,300,000 Down Under Boomerang, Inc. is considering a new three- year expansion project that requires an initial fixed asset investment of $2.7 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which it will be worthless. The project is estimated to generate $2,400,000 in annual sales, with costs of $960,000. If the tax rate is 35 percent, what is the annual OCF for this project? (Select the range that includes the correct solution.) Less $1,000,000 Greater than or equal to $1,000,000 but less than $1,100,000 Greater than or equal to $1,100,000 but less than $1,200,000 Greater than or equal to $1,200,000 but less than $1,300,000 Greater than or equal to $1,300,000 Consider an assets that costs $440,000 and is depreciated straight-line to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for $55,000. If the relevant tax rate is 35 percent, what is the after-tax cash flow from the sale of this asset? Select the range that includes the correct answer. Less than $90,000 Greater than or equal to $90,000 but less than $100,000 Greater than or equal to $100,000 but less than $110,000 Greater than or equal to $110,000 but less than $120,000 Greater than or equal to $120,000 Your firm needs a computerized machine tool lathe which costs $50,000, and requires $12,000 in maintenance for each year of its 3 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 35% and a discount rate of 12%. What is the depreciation tax shield for this project in year 3? Select the range that includes the correct solution. See MACRS table below. Depreciation Year % 1 33% 2 45% 3 15% 4 7% Less than $2,500 Greater than or equal to $2,500 but less than $2,600 Greater than or equal to $2,600 but less than $2,700 Greater than or equal to $2,700 but less than $2,800 Greater than or equal to $2,800 Which of the following are relevant costs when calculating operating cash flow (OCF) for a project? I. Interest expense due to the project II. Decreased operating expenses due to the project III. A decrease in dividends due to the project O l only O ll only Ill only More than one are relevant. None are relevant