30) Vanzant Corporation has provided the following information concerning a capital budgeting project: After-tax discount rate Tax rate Expected life of the project Investment required in equipment Salvage value of equipment Working capital requirement 6% 30% 4 $ 240,000 $0 $ 20,000 $540,000 $ 380,000 $ 70,000 One-time renovation expense in year 3 The working capital would be required immediately and would be released for use elsewhere at the end of the project. The company uses straight-line depreciation on all equipment. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital Annual sales Annual cash operating expenses

30) Vanzant Corporation has provided the following information concerning a capital budgeting project: After-tax discount rate Tax rate Expected life of the project Investment required in equipment Salvage value of equipment Working capital requirement 6% 30% 4 $ 240,000 $0 $ 20,000 $540,000 $ 380,000 $ 70,000 One-time renovation expense in year 3 The working capital would be required immediately and would be released for use elsewhere at the end of the project. The company uses straight-line depreciation on all equipment. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital Annual sales Annual cash operating expenses

Name: 30)Vanzant Corporation has provided the following information concern
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Description: 30)Vanzant Corporation has provided the following information concerning a capital budgeting project:After-tax discount rateTax rateExpected life of the project$ 240,000Investment required in equipmentSalvage value of equipment$0$ 20,000Working capi

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 19P

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Would you rather have $7,500 today or at the end of 20 years after it has been invested at 15%? Explain your answer. The following are independent situations. For each capital budgeting project, indicate whether management should accept or reject the project and list a brief reason why.
Assume the following information for a capital budgeting proposal with a five- year time horizon: Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket costs The payback period for this investment is closest to: Multiple Choice O O 2.71 years. 5.75 years. 3.54 years. 1.21 years. $ 460,000 $ 300,000 $ 130,000 $ 50,000 $ 40,000
Assume the following information for a capital budgeting proposal with a five-year time horizon: Initial investment: Cost of equipment (zero salvage value) $ 500,000 Annual revenues and costs: $ 300,000 $ 130,000 $ 50,000 $ 40,000 Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket costs Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. If the company's discount rate is 12%, then the net present value for this investment is closest to: Multiple Choice $211,600. $(31,350). $(111,600). $(211,600).
Assume the followling Information for a capital budgeting proposal with a five-year time horizon: Initial investment: Cost of equipment (zero salvage value) $ 560,000 Annual revenues and costs: $ 300, 000 $ 130,000 $ 50,000 $ 40,000 Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket costs Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. If the company's discount rate is 12%, then the net present value for this Investment is closest to: Multiple Choice $271,600. $(171,600). $1271,600). $191,350).
Assume the followling Information for a capital budgeting proposal with a five-year time horizon: Initial investment: Cost of equipment (zero salvage value) $ 530, 000 Annual revenues and costs: $ 300,000 $ 130,000 $ 50,000 $ 40,000 Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket costs Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. This proposal's Internal rate of return is closest to: Multiple Choice 7%. 12%. 5%. 10%.
Assume the following information for a capital budgeting proposal with a five-year time horizon: Initial investment: Cost of equipment (zero salvage value) $ 460,000 Annual revenues and costs: Sales revenues $ 300,000 Variable expenses $ 130,000 Depreciation expense $ 50,000 Fixed out-of-pocket costs $ 40,000 Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. This proposal’s internal rate of return is closest to:
Assume the following information for a capital budgeting proposal with a five-year time horizon: Initial investment: Cost of equipment (zero salvage value) $ 550,000 Annual revenues and costs: Sales revenues $ 300,000 Variable expenses $ 130,000 Depreciation expense $ 50,000 Fixed out-of-pocket costs $ 40,000 Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. This proposal’s internal rate of return is closest to: Multiple Choice 5%. 10%. 3%. 8%
Stockinger Corporation has provided the following information concerning a capital budgeting project: $ 314,000 4 $0 Investment required in equipment Expected life of the project Salvage value of equipment Annual sales Annual cash operating expenses Working capital requirement One-time renovation expense in year 3 The company's income tax rate is 30% and its after-tax discount rate is 11%. The working capital would be required immediately and would be released for use elsewhere at the end of the project. The company uses straight-line depreciation on all equipment. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting. The total cash flow net of income taxes in year 3 is: Multiple Choice O O O $91,450 $97,000 $57,000 $ 665,000 $ 471,000 $ 30,000 $ 97,000 $137,000
Calculate the NPV for the following capital budgeting proposal: $100,000 initial cost for equipment, straight-line depreciation over 5 years to a zero book value, $5,000 pre-tax salvage value of equipment, 35% tax rate, $45,000 additional annual revenues, $15,000 additional annual cash expenses, $8,000 initial investment in working capital to be recouped at project end, and a cost of capital of 11%. Should the project be accepted or rejected? (Show your work computing the NPV.)
Given the following capital budgeting assumptions: Yearly old operating cost 21,000 Yearly old depreciation cost 2,000 Yearly old maintenance cost 12,000 Yearly old tax payment 7,000 Yearly new operating cost 15,000 Yearly new depreciation cost 3,500 Yearly new maintenance cost 13,500 Yearly new tax payment 9,000 Tax Rate 25% Discount Rate 15% Project Investment 45,000 Project Life 6 уears What is the Net Present Value (NPV) of the yearly (annual) capital budgeting cost?
Appelbaum Inc. is comparing several alternative capital budgeting projects as shown below: Projects A B C Initial investment $80,000 $120,000 $160,000 Present value of net cash flows 90,000 110,000 200,000 Using the net present value, how many of the projects are available?? Group of answer choices
Calculate the NPV for the following project, assuming that the cost of capital is 15 percent and that the initial after tax cost of starting the project is $5,000,000. Assume that it will provide after-tax operating cash inflows as shown below:Year 1: $1,800,000 Year 2: $1,900,000 Year 3: $1,700,000 Year 4: $1,300,000 Calculate the IRR for the following project. The initial after tax cost is $5,000,000. The project is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3 and $1,300,000 in year 4? Calculate the IRR for the following project. Assume that its initial after tax cost is $5,000,000 and it is expected to provide after-tax operating cash flows of ($1,800,000) in year 1, $2,900,000 in year 2, $2,700,000 in year 3 and $2,300,000 in year 4?