Question: Please answer them correctly. Here are 2 short problems. Please solve all 2 problems correctly. Make sure the answers are correct. I would really appreciate
Please answer them correctly. Here are 2 short problems. Please solve all 2 problems correctly. Make sure the answers are correct. I would really appreciate your effort. Thanks.
1). Sunland, Inc., is considering investing in a new production line for eye drops. Other than investing in the equipment, the company needs to increase its cash and cash equivalents by $10,000, increase the level of inventory by $27,000, increase accounts receivable by $25,000, and increase accounts payable by $5,000 at the beginning of the project. Sunland will recover these changes in working capital at the end of the project 8 years later. Assume the appropriate discount rate is 9 percent. What are the present values of the relevant investment cash flows? (Do not round intermediate calculations. Round answer to 2 decimal places, e.g. 15.25.)
Present Value $__________?
2). Given the soaring price of gasoline, Ford is considering introducing a new production line of gas-electric hybrid sedans. The expected annual unit sales of the hybrid cars is 40,000; the price is $25,000 per car. Variable costs of production are $14,000 per car. The fixed overhead including salary of top executives is $80 million per year. However, the introduction of the hybrid sedan will decrease Fords sales of regular sedans by 6,000 cars per year; the regular sedans have a unit price of $20,000, a unit variable cost of $12,000, and fixed costs of $250,000 per year. Depreciation costs of the production plant are $52,000 per year. The marginal tax rate is 40 percent. What is the incremental annual cash flow from operations?
Incremental annual cash flow from operations $____________?
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