Use the following information of the next 3 questions:

Global Technology considers investing a total of $30,000 in cloud computing.

• This $30,000 will be 100% depreciated over the three-year life of the project.
• The project will require an initial $10,000 investment in NWC and the tax rate is 20%.
• At the end of the projects life, the fixed assets will be worth $20,000, and Global Technology will recover $9,000 that was tied up in working capital.
• The OCF for the next 3 years is $32,000.

A.) Calculate the CFFA in Yr 0

[Do NOT forget the "-" sign in your answer.]

B.) Calculate the CFFA in Yr 3: CFFA3

[Hint: the after-tax salvage value in Yr 3 = End-of-project worth x (1 - 0.2) ]

Group of answer choices

55,000

58,000

54,000

56,000

57,000

59,000

C.) Calculate the NPV of this project with a discount rate of 19%. Round-off to an integer.

[Hint: CFFA1 = CFFA2 = 32000]

Question 33

Bonus Question:

Consider two companies, X and Y

The business of Company X is sensitive to the economy/market and the business of Company Y is NOT sensitive to the economy/market.

Other things being equal, Company __________ will have a higher beta and Company ____________ will have higher expected returns.

Group of answer choices

Y; Y

X; Y

X; X

Y; X