1.ABC Corporation is considering an expansion project. The necessary equipment could be purchased for $29 388 and shipping and installation costs are another $717. The project will also require an initial $4 436 investment in net working capital. The company’s tax rate is 40%. What is the project’s initial investment outlay?2. A project requires $360 566 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? 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 net A project requires $434 688 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? 3. A project requires $433 268 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? 4. A project requires $434 688 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? 5. ABC Company purchased $22 856 of equipment 4 years ago. The equipment is 7-year MACRS property. The firm is selling this equipment today for $4 685. What is the aftertax cash flow from this sale if the tax rate is 25 percent? The MACRS allowance percentages are as follows commencing with year one: 14.29 24.49 17.49 12.49 8.93 8.92 8.93 and 4.46 percent.6. ABC Company purchased some new equipment 2 years ago for $392 323. Today it is selling this equipment for $30 301. What is the aftertax cash flow from this sale if the tax rate is 35 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.7. ABC Company has a proposed project that will generate sales of 495 units annually at a selling price of $216 each. The fixed costs are $5 376 and the variable costs per unit are $44. The project requires $31 038 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 $31 038/4. The salvage value of the fixed assets is $6 900 and the tax rate is 30 percent. What is the operating cash flow for year four?8.A project has an initial requirement of $199 615 for new equipment and $9 833 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 $136 094. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $99 835 and the cost of capital is 5% What is the project’s NPV if the tax rate is 27%?9. ABC Inc. has estimated the following revenues and expenses related phase I of a proposed new housing development? Incremental sales= $6 175 555 total cash expenses $3 101 903 depreciation $355 192 taxes 28% interest expense $200 000. What are the operating cash flows?10.ABC Company purchased $44 198 of equipment 5 years ago. The equipment is 7-year MACRS property. The firm is selling this equipment today for $7 537. What is the aftertax cash flow from this sale if the tax rate is 28 percent? The MACRS allowance percentages are as follows commencing with year one: 14.29 24.49 17.49 12.49 8.93 8.92 8.93 and 4.46 percent.11. ABC has a proposed project which will generate sales of 174 units at a selling price of $277 each. The fixed costs are $10 212 and the variable costs per unit are $75. The project requires $101 184 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 $101 184/5.The tax rate is 23%. What is the operating cash flow for year 5?12. ABC Inc. has estimated the following revenues and expenses related phase I of a proposed new housing development? Incremental sales= $519 380 total cash expenses $355 834 depreciation $48 421 taxes 25%. What are the operating cash flows?13.ABC Compay has the following projections for Year 1 of a capital budgeting project. Year 1 Incremental Projections: Sales $873 666 Variable Costs $124 931 Fixed Costs $39 393 Depreciation Expense $83 143 Tax Rate 32% Calculate the operating cash flow for Year 1.14. A project has an initial requirement of $207 175 for new equipment and $8 202 for net working capital. The installation costs to get the new equipment in working condition are 11 713. 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 $97 069. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $111 817 and the cost of capital is 13% What is the project’s NPV if the tax rate is 37%?15. 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%?
