Finance Quiz 2 Problems 2015

ABC Inc. has estimated the following revenues
and expenses related phase I of a proposed new housing development? Incremental
sales= $6,311,329, total cash expenses $3,604,173, depreciation $689,097, taxes
28%, interest expense, $200,000. What are the operating cash flows?
Enter your answer rounded off to two decimal points. Do not enter
$ or comma in the answer box. For example, if your answer is $12.345 then
enter as 12.35 in the answer box.

ABC Compay has the following
projections for Year 1 of a capital budgeting project.

Year 1 Incremental Projections:

Sales $622,405

VariableCosts $21,223

FixedCosts $77,164

Depreciation
Expense
$53,171

TaxRate 29%

Calculate
the operating cash flow for Year 1.
Enter your answer
rounded off to two decimal points. Do not enter $ or comma in the answer box.
For example, if your answer is $12.345 then enter as 12.35 in the answer box.

ABC Corporation is considering an expansion
project. The necessary equipment could be purchased for $27,000 and shipping
and installation costs are another $679. The project will also require an
initial $3,360 investment in net working capital. The company’s tax rate is
40%. What is the project’s initial investment outlay?.7pt;’=”” 0pt;=”” 0cm;=”” normal;=”” roman”,”serif”;=”” new=”” “times=”” 0);=”” 0,=”” rgb(0,=”” white;=””>Enter your answer rounded off
to two decimal points. Do not enter $ or comma in the answer box. For example,
if your answer is $12.345 then enter as 12.35 in the answer box..7pt;’=”” 0pt;=”” 0cm;=”” normal;=”” roman”,”serif”;=”” new=”” “times=”” 0);=”” 0,=”” rgb(0,=”” white;=””>.7pt;=””>A project has an initial requirement of $206,155 for new equipment
and $9,987 for net working capital. The fixed assets will be depreciated to a
zero book value over the 3-year life of the project and have an estimated
salvage value of $130,954. All of the net working capital will be recouped at
the end of the project. The annual operating cash flow is $72,516 and the cost
of capital is 11% What is the project’s NPV if the tax rate is 33%?
Enter your answer
rounded off to two decimal points. Do not enter $ or comma in the answer box.
For example, if your answer is $12.345 then enter as 12.35 in the answer box.
ABC Company purchased some new equipment 2 years ago for $329,979.
Today, it is selling this equipment for $69,441. What is the aftertax cash flow
from this sale if the tax rate is 27 percent? The MACRS allowance percentages
are as follows, commencing with year one: 20.00, 32.00, 19.20, 11.52, 11.52,
and 5.76 percent.

Enter your answer rounded off to two decimal points. Do not enter
$ or comma in the answer box. For example, if your answer is $12.345 then enter
as 12.35 in the answer box.

A project has an annual
operating cash flow of $18,887. Initially, this 4-year project required $4,051
in net working capital, which is recoverable when the project ends. The firm
also spent $10,000 on equipment to start the project. This equipment will have
a book value of $3,524 at the end of year 4. What is the total cash flow for
year 4 of the project if the equipment can be sold for $5,890 and the tax rate
is 35%?

ABC Company has a proposed
project that will generate sales of 200 units annually at a selling price of
$158 each. The fixed costs are $6,194 and the variable costs per unit are $121.
The project requires $19,159 of equipment that will be depreciated on a
straight-line basis to a zero book value over the 4-year life of the project.
That is, depreciation each year is $19,159/4. The salvage value of the fixed
assets is $6,900 and the tax rate is 25 percent. What is the operating cash
flow for year four?

ABC has a
proposed project which will generate sales of 185 units at a selling price of
$313 each. The fixed costs are $11,068 and the variable costs per unit are $36.
The project requires $102,014 of machinery which will be depreciated on a
straight-line basis over the 5-year life of the project.That is, depreciation each year is $102,014/5.The tax
rate is 37%. What is the operating cash flow for year 5?
Enter your answer
rounded off to two decimal points. Do not enter $ or comma in the answer box.
For example, if your answer is $12.345 then enter as 12.35 in the answer box.
A project has an initial
requirement of $205,484 for new equipment and $9,421 for net working capital.
The installation costs to get the new equipment in working condition are
11,833. The fixed assets will be depreciated to a zero book value over the
4-year life of the project and have an estimated salvage value of $101,915. All
of the net working capital will be recouped at the end of the project. The
annual operating cash flow is $80,574 and the cost of capital is 19% What is
the project’s NPV if the tax rate is 26%?

A project requires $318,318 of
equipment that is classified as 7-year property. What is the depreciation
expense in year 3 given the following MACRS depreciation allowances, starting
with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46
percent?

A project requires $347,241 of
equipment that is classified as 7-year property. What is the book value of this
asset at the end of year 5 given the following MACRS depreciation allowances,
starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46
percent?

A project requires $100,718 of
equipment that is classified as 7-year property. What is the book value of this
asset at the end of year 3 given the following MACRS depreciation allowances,
starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46
percent?