(Calculating changes in net operating working capital) Duncan Motors is introducing a new product and has an expected change in net operating income of $290,000. Duncan Motors has a 36 percent marginal tax rate. This project will also produce $51,000 of depreciation per year. In addition, this project will cause the following changes in year 1: Without the Project $34,000 27.000 53,000 With the Project $20,000 36,000 91,000 Accounts receivable Inventory Accounts payable (Click on the loan in order to copy da contents into a spreadsheer) What is the project's free cash flow in year 17 The free cash flow of the project in year 1 is $. (Round to the nearest dollar) COLO
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- Racin’ Scooters is introducing a new product and has an expected change in EBIT of $475,000. Racin’ Scooters has a 21 percent marginal tax rate. Bonus depreciation will be $250,000 in year 1. In addition, the project will cause the following changes in year 1: WITHOUT THE PROJECT WITH THE PROJECTAccounts receivable $45,000 $63,000Inventory 65,000 80,000Accounts payable 70,000 94,000Part 1 (Related to Checkpoint 12.1) (Calculating changes in net operating working capital) Tetious Dimensions is introducing a new product and has an expected change in net operating income of $750,000. Tetious Dimensions has a 30 percent marginal tax rate. This project will also produce $195,000 of depreciation per year. In addition, this project will cause the following changes in year 1: Without the Project With the Project Accounts receivable $51,000 $88,000 Inventory 101,000 183,000 Accounts payable 66,000 116,000 What is the project's free cash flow in year 1?Use excel The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $238,000 and cash expenses by $184,000. The initial investment will require $96,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 6-year life of the project. The company has a marginal tax rate of 32 percent. What is the annual value of the depreciation tax shield?
- 1. Textron is considering a NEW project. The financial projections are as follows: Year 0 Year 1 24,000 7,000 Year 2 24,000 Year 3 Sales 24,000 Total Costs 7,000 7,000 Depreciation Capital Investment (or Cost of Equipment) Working Capital (Requirements/Levels) 10,000 10,000 10,000 40,000 2000 2500 1000 The Equipment will be sold at the end of Year 3 for 11,000. The relevant tax rate is 35%. Compute the cash flows for the project. Please select file(s) Select file(s)Calculating changes in net operating working capital) Duncan Motors is introducing a new product and has an expected change in net operating income of $300,000. Duncan Motors has a 34 percent marginal tax rate. This project will also produce $50,000 of depreciation per year. In addition, this project will cause the following changes in year 1: Without the Project With the ProjectAccounts receivable $33,000 $23,000Inventory $25,000 $40,000Accounts payable $50,000 $86,000 The free cash flow of the project in year 1 is $ (Round to the nearest dollar.)Esc You consider purchasing a new piece of equipment (7yr MACRS property) for your manufacturing process for $120,000. The equipment has a 6-year useful life and no salvage value. The equipment is expected to generate an additional $40,000 of net income before taxes and depreciation each year by using this upgraded system. The combined federal and state income tax rate= 35%. Annual inflation = 4%. a. Fill in the following table assuming MACRS depreciation rates Year 46°F Rain showers 0 1 F1 2 O 2 3 4 5 Pretax income 6 MACRS Taxable Depreciation income F2 - F3 + F4 Ⓡ b. If your MARR = 12%, should you purchase this system based on your real after-tax income? Why or why not? F5 8 C B Tax owed F6 Q Search G After tax income F7 Ca 7 F8 O Inflation adjustment factor O F9 ala LG F10 Real after tax income 0 A I THE F11 - 0 1 asod F12 + Prt Sc ScrLk Post-it sod Ins Post-it Del Backspace Post-it PgUp Home asod> Post-it Mumi 1-10 PgOn End Pause Break 11-15 11-15 C
- K- (Calculating changes in net operating working capital) Duncan Motors is introducing a new product and has an expected change in net operating income of $315,000. Duncan Motors has a 32 percent marginal tax rate. This project will also produce $54,000 of depreciation per year. In addition, this project will cause the following changes in year 1 Without the Project Accounts receivable $31.000 Inventory 27,000 Accounts payable 55.000 (Click on the soon in order to copy its contents into a spreadsheet) What is the project's free cash flow in year 17 The free cash flow of the project in year 1 is $ With the Project $20,000 44,000 61,000 (Round to the nearest dollar)Project Section 1: You are considering buying an industrial equipment whose price is 445000. The equipment is expected to earn an annual revenue of $150,000. The equipment will be depreciated under MACRS as a five-year recovery property. The equipment will be used for seven years, at the end of which time, you can sell it for $50,000. Your company's marginal tax rate is 35% over the project period. Perform the following: a) Determine the net after-tax cash flows for each period over the project life. b) Net present worth assuming company MARR 15% . c) Annual equivalent cash flow company MARR 15%. = =Your company, RMU Inc., is considering a new project whose data are shown below. Under the new tax law, the equipment used in the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. What is the project's Year 1 cash flow? Sales revenues $26,750 Operating costs $13,511 Tax rate 25.0%
- Palmer Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $164,900. The equipment will have an initial cost of $485,000 and have a 7 year life. If the salvage value of the equipment is estimated to be $9,000, what is the accounting rate of return? Multiple Choice 34.00% 23.28% 156.37% 51.11%Macrohard Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the allowed depreciation rates for such property are 35 %, 43%, 17%, and 5% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year expected life. Equipment cost (depreciable basis) P78,000 Sales revenues, each year 50,000 Operating costs (excl. depreciation) 25,000 Tax rate 25.0% The following are the questions/requirements for this data set. Fill-up the answers in the next 3 questions: (Round final answers to nearest peso) Year 1 Operating Cash Flow • Year 3 Operating Cash Flow Year 5 Operating Cash FlowBuilders Supply, Inc.is considering adding a new product line that is expected to increase annual sales by $367,000 and expenses by $256,000. The project will require $165,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 8-year life of the project. The company has a marginal tax rate of 34 percent. What is the depreciation tax shield?