Capital budgeting. (10 points) Calculate initial investment, appropriate cash flows, and use the net present value...
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Capital budgeting. (10 points) Calculate initial investment, appropriate cash flows, and use the net present value criteria to evaluate the following investment opportunity: Current revenues Expected new revenues Cash outflows (CGS) Old Cash outflows (CGS) New Price of project Life of project Cost of funds Tax rate Revenues from old equipment Book value of old equipment Change in NWC Residual value new equipment Explanation: 2000 3000 1500 2000 500 5 20% 40% 250 50 62.4648463 0 a. Initial investment: b. c. Net present value: d. Accept/reject? Why? Intermediate cash flows (or their PV) Capital budgeting. (10 points) Calculate initial investment, appropriate cash flows, and use the net present value criteria to evaluate the following investment opportunity: Current revenues Expected new revenues Cash outflows (CGS) Old Cash outflows (CGS) New Price of project Life of project Cost of funds Tax rate Revenues from old equipment Book value of old equipment Change in NWC Residual value new equipment Explanation: 2000 3000 1500 2000 500 5 20% 40% 250 50 62.4648463 0 a. Initial investment: b. c. Net present value: d. Accept/reject? Why? Intermediate cash flows (or their PV)
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a Initial investment The initial investment for this project is 500 This is the price of the project ... View the full answer
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