Term Paper On Capital Budgeting

They must be subtracted from cash inflows (measured by other cash flow). Changes in NWC indicate cash outflows (measured by change in NWC) must be subtracted from cash inflows (measured by operating cash flow). Changes in NWC have important tax implications (a tax shield), so they must be multiplied by 1 minus the tax rate to find total cash flow. Why is it important to find changes of net working capital (NWC) in developing cash flows? Changes in NWC indicate capital expenditures (such as purchase of equipment). A project has expected sales of 15,000 units plus or minus four percent, variable cost per unit of 0 plus or minus three percent, fixed costs of 1,000 plus or minus two percent, and a sales price per unit of 8 plus or minus two percent.

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Questions 1 to 20: Select the best answer to each question.

If a project has a net present value equal to zero, then A. The present value of the cash inflows likely to result from this initial investment is $1,208,293.

the total of the cash inflows must equal the initial cost of the project. A project requires an initial investment of $950,000 today.

If a firm accepts Project A, it won’t be feasible to also accept Project B because both projects would require the simultaneous and exclusive use of the same piece of machinery.

Depreciation is a way to allocate the cost of capital expenditures (equipment) over the useful life of the asset. The equipment can be sold at the end of the project for 5,000. This project requires the purchase of

Depreciation is a way to allocate the cost of capital expenditures (equipment) over the useful life of the asset.

The equipment can be sold at the end of the project for $815,000.

This project requires the purchase of $1,089,000 of equipment that will be depreciated using straight-line depreciation to a zero book value over the project’s life.

The house cost $219,000 when you purchased it four years ago. multiplying NPV weighted by the proportion of project assets to firm assets.

The maintenance expenses on a rental house you own average $200 a month. The profitability index is calculated by End of exam A.

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Depreciation is a way to allocate the cost of capital expenditures (equipment) over the useful life of the asset. The equipment can be sold at the end of the project for $815,000. This project requires the purchase of $1,089,000 of equipment that will be depreciated using straight-line depreciation to a zero book value over the project’s life. The house cost $219,000 when you purchased it four years ago. multiplying NPV weighted by the proportion of project assets to firm assets. The maintenance expenses on a rental house you own average $200 a month. The profitability index is calculated by End of exam A. It doesn’t matter because both firms have a similar amount of risk. Assuming fixed costs are $60,000, how many units would the firm have to sell to hit the cash break even? Scenario analysis determines different NPV estimates based on different what-if questions; sensitivity analysis changes one variable at a time and determines different NPV estimates. Assume that a firm wants to add staplers to their product line and sell each unit for $15. Assuming incremental fixed costs are $10,000, what can we say with certainty about the project? The fixed costs will be $528,000 a year, and the variable costs will be $1,640,000 per building. Our team of experienced writers is on standby to deliver to you an original paper as per your specified instructions with zero plagiarism guaranteed. You’ll also need $280,000 in net working capital over the life of the project. $2,116,200 Are you looking for a similar paper or any other quality academic essay? Our research paper writing service is what you require. If you sell the house, you’ll incur $14,000 in real estate fees. You’re trying to decide whether to sell the house or convert it for your own use as a professional office. A recent appraisal on the house valued it at $239,000.

,089,000 of equipment that will be depreciated using straight-line depreciation to a zero book value over the project’s life. The house cost 9,000 when you purchased it four years ago. multiplying NPV weighted by the proportion of project assets to firm assets. The maintenance expenses on a rental house you own average 0 a month. The profitability index is calculated by End of exam A. It doesn’t matter because both firms have a similar amount of risk. Assuming fixed costs are ,000, how many units would the firm have to sell to hit the cash break even? Scenario analysis determines different NPV estimates based on different what-if questions; sensitivity analysis changes one variable at a time and determines different NPV estimates. Assume that a firm wants to add staplers to their product line and sell each unit for . Assuming incremental fixed costs are ,000, what can we say with certainty about the project? The fixed costs will be 8,000 a year, and the variable costs will be

Depreciation is a way to allocate the cost of capital expenditures (equipment) over the useful life of the asset.

The equipment can be sold at the end of the project for $815,000.

This project requires the purchase of $1,089,000 of equipment that will be depreciated using straight-line depreciation to a zero book value over the project’s life.

The house cost $219,000 when you purchased it four years ago. multiplying NPV weighted by the proportion of project assets to firm assets.

The maintenance expenses on a rental house you own average $200 a month. The profitability index is calculated by End of exam A.

||

Depreciation is a way to allocate the cost of capital expenditures (equipment) over the useful life of the asset. The equipment can be sold at the end of the project for $815,000. This project requires the purchase of $1,089,000 of equipment that will be depreciated using straight-line depreciation to a zero book value over the project’s life. The house cost $219,000 when you purchased it four years ago. multiplying NPV weighted by the proportion of project assets to firm assets. The maintenance expenses on a rental house you own average $200 a month. The profitability index is calculated by End of exam A. It doesn’t matter because both firms have a similar amount of risk. Assuming fixed costs are $60,000, how many units would the firm have to sell to hit the cash break even? Scenario analysis determines different NPV estimates based on different what-if questions; sensitivity analysis changes one variable at a time and determines different NPV estimates. Assume that a firm wants to add staplers to their product line and sell each unit for $15. Assuming incremental fixed costs are $10,000, what can we say with certainty about the project? The fixed costs will be $528,000 a year, and the variable costs will be $1,640,000 per building. Our team of experienced writers is on standby to deliver to you an original paper as per your specified instructions with zero plagiarism guaranteed. You’ll also need $280,000 in net working capital over the life of the project. $2,116,200 Are you looking for a similar paper or any other quality academic essay? Our research paper writing service is what you require. If you sell the house, you’ll incur $14,000 in real estate fees. You’re trying to decide whether to sell the house or convert it for your own use as a professional office. A recent appraisal on the house valued it at $239,000.

,640,000 per building. Our team of experienced writers is on standby to deliver to you an original paper as per your specified instructions with zero plagiarism guaranteed. You’ll also need 0,000 in net working capital over the life of the project. ,116,200 Are you looking for a similar paper or any other quality academic essay? Our research paper writing service is what you require. If you sell the house, you’ll incur ,000 in real estate fees. You’re trying to decide whether to sell the house or convert it for your own use as a professional office. A recent appraisal on the house valued it at 9,000.

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