University Parking, LLC is looking at a new app to manage open parking spots, with an installed cost of $705,000. This cost will be depreciated straight-line to zero over the project's 6-year life, and at the end of which the app can be salvaged for $95,000. The new app will generate Operating Cash Flow (OCF) of $181,625 per year. The app also requires an initial investment in Net Working Capital of $55,000, that will be returned at the end of the project. If the tax rate is 25% and the discount rate is 10%, a. What is the Net Present Value of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 12.34.) a. NPV b. What is the formula used to calculate Net Present Value (a)? (Write the number of the formula from the formula sheet) b. Formula used to calculate part (a) c. What is the value used for Net Salvage Cash Flow? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 12.34.) c. Net Salvage Cash Flow d. What is the formula used to calculate Net Salvage Cash Flow (c)? (Write the number of the formula from the formula sheet) d. Formula used to calculate part (c) Vstraight-line Years 6 Sensitivity _ Variable ANPV A variable AOCF 7 Sensitivity _ Variable - A variable 10 n n CFt NPV = (1 + R) t=0 0 = CFt (1 + IRR) IRR = Rate Low + (NPV Low)(Rate High Ratelow) (NPV, "High t=0 - NPV Low 13 R= D1 Po= (R-g) D+ + g Po= R Dividend Yield: DPR EPSE Po Price/share 16 PE = Earnings 17 P-S = Price/share Sales 18 Sales S/S = # shares outstanding 19 Earnings (Revenue - Cost) EPS = # shares outstanding 20 EPS = DPRE Price = Benchmark PE ratio x EPS 21 Price = Benchmark P-S ratio x Sales/Sharet 22 25 27 1 (1+r) n 23 PVA - PMT PVAD: PMT (1 + r) PVp=[PM PVA |(1+r) -1 24 FVA - PMT MT 26 FVAD: PMT (4=r)" (1 + r) PMT = 28 r (1+r)n r 29 Current Yield = 1- Annual Coupon Price (PO) 30 PBond = 0 F (1+YTM) YTM 31 (1+R) = (1+r)(1+h) (1+YTM) FV 32 FV = PV(1+r) PV = r-(E)- -1 ta In (FV) In (1+r) (1+r)' 33 34 35