A proposed expansion project is expected to increase sales by $93,000 and increase cash expenses by...

 
 

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A proposed expansion project is expected to increase sales by $93,000 and increase cash expenses by $36,000. The project will require $55,000 of fixed assets that will be depreciated using straight-line depreciation to a zero book value over the five-year life of the project. The store has a marginal tax rate of 30 percent. What is the operating cash flow of the project using the tax shield approach? Ignore bonus depreciation. Instruction: Enter your response rounded to two decimal places. A firm has sales of $883,000 and a profit margin of 5.6 percent. The annual depreciation expense is $84,000. What is the amount of the operating cash flow if the company has no long-term debt? Instruction: Enter your response rounded to two decimal places. A firm is considering a new seven-year expansion project with an initial fixed asset investment of $4.2 million. The fixed asset will be depreciated straight-line to zero over its seven-year tax life, after which time it will be worthless. No bonus depreciation will be taken. The project is estimated to generate $2,205,000 in annual sales, with costs of $677,000. The tax rate is 24 percent and the required return is 9.8 percent. What is the net present value of this project? Instruction: Enter your response rounded to two decimal places. A proposed expansion project is expected to increase sales by $93,000 and increase cash expenses by $36,000. The project will require $55,000 of fixed assets that will be depreciated using straight-line depreciation to a zero book value over the five-year life of the project. The store has a marginal tax rate of 30 percent. What is the operating cash flow of the project using the tax shield approach? Ignore bonus depreciation. Instruction: Enter your response rounded to two decimal places. A firm has sales of $883,000 and a profit margin of 5.6 percent. The annual depreciation expense is $84,000. What is the amount of the operating cash flow if the company has no long-term debt? Instruction: Enter your response rounded to two decimal places. A firm is considering a new seven-year expansion project with an initial fixed asset investment of $4.2 million. The fixed asset will be depreciated straight-line to zero over its seven-year tax life, after which time it will be worthless. No bonus depreciation will be taken. The project is estimated to generate $2,205,000 in annual sales, with costs of $677,000. The tax rate is 24 percent and the required return is 9.8 percent. What is the net present value of this project? Instruction: Enter your response rounded to two decimal places.

Answer rating: 100% (QA)

SOLUTION To calculate the operating cash flow of the project using the tax shield approach we need to consider the changes in sales cash expenses and the tax shield effect of depreciation Given Increa... View the full answer