GALILEO I Locker Logged in as landers-ashleigh : 11/s/2017. STATE VERSITY Manage
ID: 2781032 • Letter: G
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GALILEO I Locker Logged in as landers-ashleigh : 11/s/2017. STATE VERSITY Managerial Finance XLS Group B8 Fall Semester 2017 Co Discussions Assignments Quizzes I Grades Rubrics Groups Self Assessments Classist Quiz 12- Capital Budgeting CF- Quiz Ashleigh Landers: Attempt1 Hollister & Hollister is considering inventory, and $40,000 for additional accounts has a 6-year life. The fixed assets will be depreciated the project, the fixed assets can be sold for 20 percent of their original cost. The at the end of the project. The project is expected to generate annual sales of a new project. The project will require $500,000 for new fixed assets, $220,000 for additional straight-line to a zero book value over the life of the project. At the end of receivable. Short-term debt is expected to increase by $200,000. The project net working capital returns to its original level $900,000 and costs of $650,000. The tax rate is 5h flow recovery from net woring capital at the end of 34 percent and the required rate of retum is 14 percent. What is the this project? $60,000 Quia 75,000 560,000 $460,000 $300,000 Save Question 3 (10 points) Gone Home, Inc. is considering a new 6-year gxpansion project that requires an initial fxed asset investment of $5.994 million. The fixed asset will be depreciated straight-ine to zero over Rs 6-year tax life. after which time it will be worthless. The tax rate is 31 percent. What is the operating cash flow for this project? $1,993,333 $2.567,800Explanation / Answer
Cash Flow Recovery from Net Working Capital = Change in Net working capital in the beginning
= Change in Current Assets - Change in Current Liabilities
= (220,000 + 40,000) - (200,000)
= 260,000 - 200,000
= 60,000
Hence, Option-(a) is correct
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