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- Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in year two, $2,000 in year three. $2,500 in year four, and $2,000 in year five. What is the NPV using 8% as the discount rate? For further instructions on net present value in Excel, see Appendix C.In order to finance a new project, a company borrowed $4,000,000 at 8% per year with the stipulation that the company would repay the loan plus all interest at the end of one year. Assume the company’s effective tax rate is 39%. What was the company’s cost of debt capital (a) before taxes, and (b) after taxes? (c) Compare the calculated after-tax cost with the approximated cost using Equation [10.4].1. Atty. Munar invested P280, 000 which will be used in a project that will produce a uniform annual revenue of P180,000 for 5 years and then have a salvage value of 15% of the investment. Out-of-pocket costs for operation and maintenance will be P80,000 per year. Taxes and insurance will 3% of the first cost per year. Atty Munar expects capital to earn not less than 30% before income taxes. Is this a desirable investment? What is the payback period of the investment?(a) Calculate using Rate of Return Method.(b) Calculate using Present Worth Method.(c) Calculate using Future Worth Method.(d) Calculate using Payback Method.
- 1.Sweets, Etc., Inc. plans to undertake a capital expenditure requiring P2 million cash outlay. Below are the projected after-tax cash inflow for the five-year period covering the useful life. The company's tax rate is 35%.Year 1=600, Year 2= 700, Year 3=480, Year 4=400, Year 5=400. The founder and president of the candy company believes that the best gauge for capital expenditure is cash payback period and that the recovery period should not be more than 75% of the useful life of the project or the asset. Should the company undertake the project? * a.No, since the payback period is 4 years or 80% of the useful life of the project. b.Yes, since the payback period is 3.55 years or 71% of the useful life of the project. c.No, since the payback period extends beyond the life of the project. d.Yes, since the payback period is 4 years and still shorter than the useful life of the project. 2.Beta Company plans to replace its company car with a new one. The new car costs P120,000 and its…Pls help with below homework. KLC Mining is borrowing money from Superior National Bank to finance the construction of a new plant in Wisconsin. The bank will loan them $1,518.207 at 10% interest per year, compounded monthly. Find the after tax cost (effective yearly percentage rate) of raising capital by using this loan if the corporate tax rate is 30%?igital Organics (DO) has the opportunity to invest $1.03 million now (t = 0) and expects after 2. The project will last for two years = - tax returns of $630,000 in t = 1 and $730,000 in t only. The appropriate cost of capital is 11% with all - equity financing, the borrowing rate is 7%, and DO will borrow $330,000 against the project. This debt must be repaid in two equal installments of $165,000 each. Assume debt tax shields have a net value of $0.20 per dollar of interest paid. Calculate the project's APV.
- Green Landscaping, Inc. is using net present value (NPV) when evaluating projects. Green Landscaping's cost of capital is 8.04 percent. What is the NPV of a project if the initial costs are $1,915,222 and the project life is estimated as 10 years? The project will produce the same after-tax cash inflows of $698,670 per year at the end of the year. Round the answer to two decimal places.What is the NPV of a 6-year project that costs $100,000, has annual revenues of $50,000 and costs of $15,000? Assume the investment can be depreciated for tax purposes straight-line over 6 years, the corporate tax rate is 35%, and the discount rate is 14%.6. A company will invest $37,072 on a capital expenditure (an asset with multi-year use). They estimate it will save $25,166 per year for the next 2 years. If their TVOM is 5.89%, what is the worth of the investment per year? (be sure to include the sign)
- Sunshine Corporation is reviewing an investment proposal. The initial cost of the investment is R52 500. The estimated cash flows and net profit for each year are presented in the schedule below. All cash flows are assumed to take place at the end of the year. year Net cash flows Net profit 1 20000 2500 2 17500 3500 3 15000 4500 4 12500 5500 5 10000 6500 The cost of capital is 12%. Required:Calculate the following:1. Payback Period 2. Net Present value 3. Accounting rate of returnChase Brew Inc is considering an investment with the following information: initial investment in assets = $1,600,000 to be depreciated to $0 via straight-line method over 8-year project life sales will increase by $1,750,000/year expenses will increase by $1,240,000/year firm's marginal tax rate is 28% What is the incremental after-tax cash flow (OCF) per year associated with the following project? Enter answer in dollars, rounded to the nearest dollar.During the year, Stan Company earned net come of P60,000. For next year, it has a capital budget of P80,000. If the company's plowback ratio is 30%, how much external funding is needed for the capital investment project?
