For the following 5 questions: CDCC is considering an expansion project that requires an initial fixed...

 

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For the following 5 questions: CDCC is considering an expansion project that requires an initial fixed asset investment (plant and equipment) of $10 million. Fixed assets will be depreciated using a 3-year MACRS schedule. The project will last for 10 years; at the end of 10 years, the fixed assets will have a market value equal to $500,000. The project will generate $2 million in annual sales, with expenses (both fixed and variable) running 40% of sales. CDCC's tax rate is 20%. Compute OCF at T-1 under OLD rules. 1) 2) 3) Year 1 Under OLD rules, what is the equipment's ATSV at T=10? 2 3 4 3-Year MACRS 33% 44% 15% 8% Suppose the project also requires an investment (an increase) in NWC of $200,000 at T=0 (which will be. fully recovered at the end of the project's life). Compute the project's T=0 outflow under OLD rules. Be sure to enter you answer with a negative sign or it will be graded incorrectly, For the following 5 questions: CDCC is considering an expansion project that requires an initial fixed asset investment (plant and equipment) of $10 million. Fixed assets will be depreciated using a 3-year MACRS schedule. The project will last for 10 years; at the end of 10 years, the fixed assets will have a market value equal to $500,000. The project will generate $2 million in annual sales, with expenses (both fixed and variable) running 40% of sales. CDCC's tax rate is 20%. Compute OCF at T-1 under OLD rules. 1) 2) 3) Year 1 Under OLD rules, what is the equipment's ATSV at T=10? 2 3 4 3-Year MACRS 33% 44% 15% 8% Suppose the project also requires an investment (an increase) in NWC of $200,000 at T=0 (which will be. fully recovered at the end of the project's life). Compute the project's T=0 outflow under OLD rules. Be sure to enter you answer with a negative sign or it will be graded incorrectly,

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1 ANS WER Oper ating cash flow Net income Dep reciation OC F ... View the full answer