1. A firm has undertaken a feasibility study to evaluate a project that has the
ID: 2630699 • Letter: 1
Question
1. A firm has undertaken a feasibility study to evaluate a project that has the following estimated cashflows:
-Amount borrowed to fund project is $200,000 with interest of 8% pa paid yearly.
If the firm is facing a discount rate of 10%, what is the NPV of this project?
a. $395,999
b. $516,155
c. $455,420
d. $506155
2. Tank Ltd is considering undertaking the purchase of a new piece of equipment that is expected to increase revenue by $12,000 each year for six years. The equipment will increase costs $4,000 each year for six years. It costs $32,000 to purchase today and for tax purposes must be depreciated down to zero over its 8 year useful life using the straight-line method. If Tank is actually forecasting a salvage (for capital budgeting purposes) of $5,000 after 6 years, what is the machine's net cash flow (after tax) for year 6? Assume the tax rate is 30%.
a. 12,400
b. 11,800
c. 13,000
d. 12,700
3.
What is the Net Present Value of a project with a discount rate of 6% p.a.compounded annually, whose net cash flows are forecast to be: (Choose the closest answer)
2,677.32
2,459.95
3,207.55
2,380.01
a. 12,400
b. 11,800
c. 13,000
d. 12,700
3.
Explanation / Answer
1.c. $455,420
2.b. 11,800.
1.d
2,380.01
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.