What are the answers to the following problems below?

The process of capital budgeting frequently involves the estimation of cash inows and outows generated by the project itself, outside ofthe normal operations of a rm. This type of process demonstrates the principle. Select one: A a. common ground A b. stand-alone A- c. Modiglianiand Miller A d. diversication A e. opportunity cost Hub.com is considering a new product called A-Plus for its customers. However, the introduction of this new product is expected to lower the revenues received from Hub.com's existing lines of products by $100,000 per month. The lowered revenues are considered Select one: A a. a sunk cost. A b. an opportunity cost. A c. a side effect. A d. an erosion. A e. b, c, and d are all correct. Iota Inc. is considering taking on a project. At the initiation of this project, the company will experience an increase in accounts receivable of $50,000, a decrease in inventory of $10,000, and an increase in accounts payable of $15,000. What is the effect of these changes in net working capital on the project's cash ows? Select one: A a. There is no effect as these are not incremental cash ows of the project. A b. Initial cash outow to the project will decrease by $25,000. A c. Initial cash outow to the project will increase by $25,000. A d. Initial cash inow to the project will increase by $25,000. O e. Annual cash ow will decrease by $25,000. A project's after-tax operating cash flow is $200,000 per year, with operating costs of $100,000 and depreciation of $20,000 per year. The rm's marginal tax rate is 30%. What are the annual sales revenues from this project? Round your answer to the nearest dollar. Select one: C a. $184,800 A b. $194,286 A c. $200,000 A d. $377,143 A e. $394,286 Jabba-Dabba-Doo Inc. renovated its warehouses exactly two years ago at a cost of $3 million. The renovations were considered leasehold improvement, and the cost was therefore subject to straight-line depreciation for tax purposes. The rm will not need to renovate the warehouses for another three years (from today). Given that the rm's marginal tax rate is 35% and required return is 11%, what is the present value ofthe remaining depreciation tax shields on the leasehold improvement? Ignore the half-year rule, and round your answer to the nearest dollar. Select one: C a. $776,138 A b. $359,630 A c. $513,180 A d. $630,000 A e. $210,000 A project requires an initial investment of $5 million and will yield operating cash ows of $1 .5 million per year for the next 10 years. At the end of 10 years, the project's assets can be divested for $250,000. The marginal tax rate is 40%, and the CCA rate is 30%. If the required rate of return is 12%, what is the present value of the CCA tax shields? Select one: C\" a. $1,352,040.82 C\" b. $1,342,381.62 C\" c. $1,329,042.73 C\" d. $1,210,537.92 C\" e. $1,049,551.30 Kerfufe Corporation is considering the purchase of a new computer system. The cost for the new system, net of set-up and delivery costs, will be $1.6 million. The new system will provide annual before-tax cost savings of $500,000 for the next ve years. The increased efciency of the new system will lower net working capital by $200,000 today. The CCA rate on the new system will be 30%. At the end of ve years, the system can be salvaged for $100,000. The rm's required rate of return is 15%, and its marginal tax rate is 35%. What is the NPV of this cost-cutting project? Select one: A a. -$224,011.86 A b. -$22,882.55 A c. $15,174.10 A d. $76,552.80 A e. $563,744.59 Lemington Enterprises is considering a project to replace its eet of 10 vehicles. The company makes its eet replacement decision every ve yea rs. Its current eet of 10 vehicles was purchased ve years ago at $50,000 each, and can be sold for $8,000 each today. The new vehicles will cost $60,000 each and will bring cost savings of $100,000 per year. In ve years, the new vehicles can be sold for $9,000 each. If the eet is not replaced today, the current eet will have no salvage value in ve years' time. The CCA rate on these vehicles is 30%, and the company's marginal tax rate is 35%. What is the PV(CCATS) for this replacement project, assuming a required rate of return of 10%? Round your answer to the nearest dollar. Select one: A a. $115,626 A b. $135,672 A c. $130,295 A d. $13,567 A e. $148,711 Monsoon Inc. is considering bidding on a government project. To do the project, the company must make an initial investment of $8 million to purchase the necessary equipment. The project will last for ve years, at the end of which the equipment can be salvaged for $500,000. The equipment has a CCA rate of 30%. The bidding process for the project requires the rm to submit a bid for a constant amount of $X before-tax, to be remitted by the government to the winning bidder each year. The rm's marginal tax rate is 40%, and the required rate of return on similar projects is 18%. What is the minimum bid that the rm should submit for this project? Round your answer to the nearest dollar. Select one: A a. $8,000,000 A b. $3,191,717 A c. $1,915,030 A (:1. $3,308,198 A e. $5,988,626 Given the following information for projects X and Y, which one should be chosen and why? ' Project X Project Y ' Net present value $1,500,000 $2,000,000 ' Project life 5 years 8 years ' Required return 10% 10% Select one: A a. Choose Project X as it has a lower equivalent annual cost than Project Y. A b. Choose Project Y as it has a lower equivalent annual cost than Project X. A c. Choose Project Y as it has a higher equivalent annual benefit than Project X. A d. Choose Project X as it has a higher equivalent annual benet than Project Y. A e. Choose Project Y as it has a higher net present value than Project X