Today (Year 0), Wheat Corporation (WHT) is evaluating whether to purchase a new combine harvester for...
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Today (Year 0), Wheat Corporation (WHT) is evaluating whether to purchase a new combine harvester for $280,000 to harvest corn in their farm. Shareholders are expecting the harvester will improve the financial performance of WHT, as a result, shareholders are anticipating receiving a special dividend of $50,000 at the end of the project. In Year 0, the new combine harvester will result in an increase in accounts payable for WHT from $12,000 to $15,000. The company anticipates that spare parts inventory immediately required for the new harvester will increase by $15,000. In Year 0, WHT have agreed to sell the harvester to a competitor in eight years' time for $120,000. The tax office states the harvester has an effective life of 12 years. Assume the company tax rate is 30%. What are the 'cash flows at the end'? [Describe and list separately each cash flow and the corresponding amount on a new line, as in lecture and tutorial examples.] [Where applicable, show as much working out as possible, otherwise you may be penalised]. Today (Year 0), Wheat Corporation (WHT) is evaluating whether to purchase a new combine harvester for $280,000 to harvest corn in their farm. Shareholders are expecting the harvester will improve the financial performance of WHT, as a result, shareholders are anticipating receiving a special dividend of $50,000 at the end of the project. In Year 0, the new combine harvester will result in an increase in accounts payable for WHT from $12,000 to $15,000. The company anticipates that spare parts inventory immediately required for the new harvester will increase by $15,000. In Year 0, WHT have agreed to sell the harvester to a competitor in eight years' time for $120,000. The tax office states the harvester has an effective life of 12 years. Assume the company tax rate is 30%. What are the 'cash flows at the end'? [Describe and list separately each cash flow and the corresponding amount on a new line, as in lecture and tutorial examples.] [Where applicable, show as much working out as possible, otherwise you may be penalised].
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Cash flows at end As book value will be zero After tax s... View the full answer
Related Book For
Managing Supply Chain and Operations An Integrative Approach
ISBN: 978-0132832403
1st edition
Authors: Thomas Foster, Scott E. Sampson, Cynthia Wallin, Scott W Webb
Posted Date:
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