Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Which of the of the following most closely approximates what the project's NPV would be when using straight-line depreciation? (Hint: Round your final answer to

image text in transcribed
image text in transcribed
image text in transcribed
Which of the of the following most closely approximates what the project's NPV would be when using straight-line depreciation? (Hint: Round your final answer to two decimal places and choose the value that most closely matches your answer.) $114,533.36 $124,492.79 $94,614.52 $99,594,23 Using the depreciation method will result in the highest NPV for the project. Ns ocher firm would take on this project if Mefann turns it down. Which of the following most closely approximates how much McFann should reduce the NPV of this project, assuming it is discovered that this project would reduce ene of its division's net after-tax cash flows by $400 for each year of the four-year project? (Hint: Round your final answer to two decimal places and chocse the value that most ciosely matches your answer.) $744.59 $1,240,98 $1,365.08 $930.74 The project will require an initial investment of $15,000, but the project will aiso be using a company-owned truck that is not currently being used. This truck could be sold for $9,000, after taxes, if the project is rejected. What should McFann do to take this information into account? The company does not need to do anything with the value of the truck because the truck is a sunk cost. Increase the amount of the initial Investment by $9,000. Increase the NPV of the project by $9,000. Companies invest in expansion projects with the expectation of increasing the earnings of its business. Consider the case of McFann Co: Mcfann Co. is considering an irvestment that will have the following sales, variable costs, and fixed operating costs: This project will require an investment of $15,000 in new equipment. Under the new tax law, the equipment is eligible for 100% bonus deprecation at t=0, so it will be fully depreciated at the time of purchase. The equipment will have no salvage value at the end of the project's four-year life. Mcfann pays a constant tax rate of 25%, and it has a weighted average cost of capital (WACC) of 11%. Determine what the project's net present value (NPV) would be under the new tax law. Which of the following most closely approximates what the project's net present value (NPV) would be under the new tax law?(Hint: Round your final answer to two decimal ploces and choose the value that most closely matches your answer.) $80,348.55$120,522.83$90,392.12$100,435.69 $99,594.23 Using the depreciation method will result in the highest NPV for the project. No other fi bonus the NPV of on this project if McFann turns it down. Which of the following most closely a straight-line suming it is discovered that this project would reduce one of its division's ne

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions