Assume that a company has provided the following information regarding a capital investment opportunity: Initial investment in equipment Initial investment in working capital Estimated annual sales Estimated annual cash operating expenses Repairs and maintenance in 3 years $ 150,000 $ 30,000 $ 160,000 $ 70,000 $ 20,000 Click here to view Exhibit 148-1 and Exhibit 148-2, to determine the appropriate discount factor(s) using the tables provided. The equipment has a four-year useful life and no salvage value. The working capital will be released at the end of the project. The company's tax rate is 30%. Assuming a discount rate of 20%, the present value of all relevant cash flows from year 4 is closest to: Multiole Choice $52.826. $50,249. $44,826. $47,249. O o o O
Assume that a company has provided the following information regarding a capital investment opportunity: Initial investment in equipment Initial investment in working capital Estimated annual sales Estimated annual cash operating expenses Repairs and maintenance in 3 years $ 150,000 $ 30,000 $ 160,000 $ 70,000 $ 20,000 Click here to view Exhibit 148-1 and Exhibit 148-2, to determine the appropriate discount factor(s) using the tables provided. The equipment has a four-year useful life and no salvage value. The working capital will be released at the end of the project. The company's tax rate is 30%. Assuming a discount rate of 20%, the present value of all relevant cash flows from year 4 is closest to: Multiole Choice $52.826. $50,249. $44,826. $47,249. O o o O
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
![Assume that a company has provided the following information regarding a capital investment opportunity:
$ 150,000
$ 30,000
$ 160,000
$ 70,000
$ 20,000
Initial investment in equipment
Initial investment in working capital
Estimated annual sales
Estimated annual cash operating expenses
Repairs and maintenance in 3 years
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.
The equipment has a four-year useful life and no salvage value. The working capital will be released at the end of the project. The company's tax rate is 30%. Assuming a discount rate of 20%, the present value of all relevant cash flows from year 4 is closest to:
Multiple Choice
$52.826.
$50.249.
$44,826.
$47,249.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9e9d7464-09f5-4ebf-a266-be9d7c802ce7%2F8fce1f59-e17e-4ced-9404-82fb6d1bb09d%2Fbm2fsh91_processed.png&w=3840&q=75)
Transcribed Image Text:Assume that a company has provided the following information regarding a capital investment opportunity:
$ 150,000
$ 30,000
$ 160,000
$ 70,000
$ 20,000
Initial investment in equipment
Initial investment in working capital
Estimated annual sales
Estimated annual cash operating expenses
Repairs and maintenance in 3 years
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.
The equipment has a four-year useful life and no salvage value. The working capital will be released at the end of the project. The company's tax rate is 30%. Assuming a discount rate of 20%, the present value of all relevant cash flows from year 4 is closest to:
Multiple Choice
$52.826.
$50.249.
$44,826.
$47,249.
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