Let's say you are going to be an Uber driver and want to estimate your annual operating after tax cash flows. Assume the following annual estimates: -trip revenue of $20,000 -depreciation expense of $1,000 -gas and maintenance of $3,000 -insurance of $900 -tax rate of 25% - 5 year project - 10% discount rate - for sake of calculation ease, all cash flows occur on the last day of the year. What is the present value of your OCF? $61,031 $49,565 $36,861 $57,240 $28,000

Let's say you are going to be an Uber driver and want to estimate your annual operating after tax cash flows. Assume the following annual estimates: -trip revenue of $20,000 -depreciation expense of $1,000 -gas and maintenance of $3,000 -insurance of $900 -tax rate of 25% - 5 year project - 10% discount rate - for sake of calculation ease, all cash flows occur on the last day of the year. What is the present value of your OCF? $61,031 $49,565 $36,861 $57,240 $28,000

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter14: Multinational Capital Budgeting

Section: Chapter Questions

Problem 1IEE

See similar textbooks

Related questions

Q: Flora Company has recorded the following cash flows at the end of each year for a project. If the…

A: Present value: It can be defined as today’s worth of an investment that will be received in the…

Q: Your company is planning to purchase a new log splitter for its lawn and garden business. The new…

A: working notes: Payback period = $204,000 / 30,000 = 6.8 Years 125,080-70,000 =55,080 Accounting rate…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Given that, Cost of grill = $35000 Depreciation = Straight line basis over 3 years Sale value after…

Q: A new machine is expected to produce the following after-tax cash inflows over a period of 5 years:…

A: Capital budgeting is one of the techniques of financial management analysis. Financial management…

Q: Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows.…

A: NPV(Net Present Value) is excess of PV of cash inflows over Intila Outlay of any proposed project.…

Q: raw Cash-Flow-Diagram ! The cost of utilities, taxes and maintenance on a home is $3,000 per year.…

A: The present value would be equivalent amount today required which is equivalent to the future cash…

Q: Your firm is evaluating a project that should generate revenue of P4,600 in year one, P5,200 in year…

A: Future value of any deposits is the sum total of each cash flow compounded at required rate of…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: The capital budgeting is a technique that helps to analyze the profitability of the project.

Q: You arc interested in purchasing a machine that will save $200,000 per yearbefore taxes. The cost of…

A: Net present value (NPV) is the difference between the present values of cash inflows and cash…

Q: You have the opportunity to expand your business by purchasing new equipment for $152,000. The…

A: Cost of equipment = $152,000. Useful life = 9 years Fixed cost = $79,000 Variable cost = 5%

Q: Kelly, Inc. management is considering purchasing a new machine at a cost of $4,133,250. They expect…

A: Net present value (NPV) is used to determine the present value of all future cash flows. Net present…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Formulas:

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Operating cash flow :- Operating cash flow (OCF) is a proportion of the measure of money produced by…

Q: Let's say you are going to be an Uber driver and want to estimate your annual operating after tax…

A: Calculation of net cash flow Particulars amount Revenue $20,000 Less:- depreciation…

Q: Lillian is considering using some of the cash generated from her mail-order business to open a…

A: Breakeven Point (in sales $) = Total Fixed Cost / PV ratio PV Ratio = Sales % -Variable Costs %…

Q: You are offered an asset that costs $150,000 and has cash flows of $1,350 at the end of every month…

A: IRR function = IRR(cashflows) NPV function = NPV(rate, cashflows) + initial cashflow Rate = 9%/12…

Q: Mariam Alikozay is considering opening a cold storage refrigeration business. She would invest…

A: Net Present Value = Present Value of Future Cashflows - Initial Cost

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Data given: Cost = $47,000 Savings on account of purchase = $23,500 Tax rate = 30% Working:…

Q: you are trying to decide whether to accept or reject a one-year project. The project is estimated to…

A: Computation:

Q: Consider a machine that initially cost $6,000 and has these estimated annual expenses and market…

A: Data Given: Initial cost of Machine= $6000 MARR =9% Required:: Economic service life = ?

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Formulas:

Q: Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows.…

A: 1. Compute NPV of Campbell Manufacturing, assuming a discount rate of 12% as shown below: The…

Q: You are an engineer proposing a potential investment and your company requires you to develop a…

A: Here, Initial Investment is Php 500000 Annual Revenue is Php 100000 Annual Expenses is Php70000…

Q: Conceptual Connection: Assuming a required rate of return of 8%, calculate the NPV for Evee…

A: Requirement 2: Compute the present value annuity factor.

Q: Your firm, Agrico Products, is considering a tractor that would have a cost of $36,000, would…

A: Hence, cash inflows from operation in scenario of 5 years life is $14,880.The cash flow after tax in…

Q: Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: The operating cash flows is calculated as net Income plus depreciation, total cash flows would be…

Q: What is the IRR of the following project? Invest $1000 in a new machine today that will generate…

A: The term IRR stands for internal rate of return, and it is the rate at which the net present value…

Q: Kimchi Corporation is thinking about introducing a new surface cleaning machine. The finance…

A: Given, The Initial cost of investment is $15 million The discount rate is 16%

Q: Your company is planning to purchase a new log splitter for its lawn and garden business. The new…

A: = Initial InvestmentAnnual cash flows=$312,000$40,000 = 7.8 Years

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Operating cash flow refers to the cash generated by the company from its normal business operations.…

Q: A constructed bridge requires no upkeep until the end of 2 years when P60,000 will be needed for…

Q: The company is considering an equipment investment that will cost $950,000. Projected future after…

A: Net present value method (NPV): Net present value method is the method which is used to compare the…

Q: determine how much can we afford to invest to overhaul this machine

A: Present value refers to the current valuation for a future sum. For a given periodic cash flow, the…

Q: You have the opportunity to expand your business by purchasing new equipment for $152,000. The…

A: Note: We are answering 1st sub-part of the question as information related to the second part is…

Q: Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows.…

A: The question is based on the concept of Net Present Value.

Q: ompute the net present value of this investment.

A: Information Provided: Purchase investment = $50,000 Working capital investment = $100,000 Rent =…

Q: Atty. Munar invested P280, 000 which will be used in a project that will produce a uniform annual…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: Company B plans to finance a project that will require an 5-year cleanup period. If it borrows $5…

A: Initial Investment “PV” = $5,000,000 Number of years “n” = 5 Interest rate “r” = 10% compounded…

Q: Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows.…

A: Capital budgeting is the process of choosing the best project or investment alternative from a given…

Q: Bill Williams has the opportunity to invest in project A that costs $6,900 today and promises to pay…

A: Initial cost of both projects = $6900 We need to calculate the payback period of both projects.

Q: A company is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The…

A: The project cash flow in year 1 is calculated as revenues less costs after accounting for taxes

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Computation of the operating cash flows in each year are shown as below: Formula sheet is annexed…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Let's say you are going to be an Uber driver and want to estimate your annual operating after tax cash flows. Assume the following annual estimates:

-trip revenue of $20,000

-depreciation expense of $1,000

-gas and maintenance of $3,000

-insurance of $900

-tax rate of 25%

- 5 year project

- 10% discount rate

- for sake of calculation ease, all cash flows occur on the last day of the year.

What is the present value of your OCF?

	$61,031
	$49,565
	$36,861
	$57,240
	$28,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Trending now

This is a popular solution!

Step by step

Solved in 6 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Let's say you are going to be an Uber driver and want to estimate your annual operating after tax cash flows. Assume the following annual estimates: -trip revenue of $20,000 -depreciation expense of $1,000 -gas and maintenance of $3,000 -insurance of $900 -tax rate of 25% - 5-year project - 10% discount rate - for sake of calculation ease, all cash flows occur on the last day of the year. What is the present value of your OCF? Use the $ symbol and round to the nearest dollar
Help asap please! DGE purchased a cement truck for $120,000. It is expected to last N=4 years. The $120,000 was borrowed from the bank at 10% interest per year compounded annually and payments are paid annually from DGE to the bank. The loan will be fully repaid in 4 years. CCA rate is 35%. Tax Rate is 40%. Answer the following questions with regards to Income Statements and Cash Flow Statements. Develop the cash flow/ investment including as many details as possible. What is the net cash flow over 6 years, A. If there were working capital (WC) required for this project, which year or years does it show up in the statement(s)?
Fill in the blank to answer the below. You invested $20,000 at the beginning of the year. At the end of the year, you received cash flows of $400 from the investment and you cashed out entirely, receiving $21,600. What is your return for the year? %
Calculate Comfy Home’s Free Cash Flow in 2018. Please note that the company’s tax rate is 25% and anticipated capital expenditures for 2018 are $25,000. Round your answer to the nearest whole dollar.
Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $320,000. It is expected to generate $40,000 of annual cash flows, provide incremental cash revenues of $215,760, and incur incremental cash expenses of $130,000 annually. What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place. Payback period years ARR %
Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial Investment of $225,000. It is expected to generate $30,000 of annual cash flows, provide incremental cash revenues of $174,350, and Incur Incremental cash expenses of $110,000 annually. What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place. Payback period ARR years
Draw the necessary cash flow diagrams. Prob#2: A man receives a P 250,000.00 credit for his old car when buying a new model costing P 750, 000.00. What remaining initial cash payment is necessary if equal payments of P 15, 000.00 at the end of each month for 20 months is charged at the rate of 7% compounded monthly? If he decided to add another P 100,000.00 after crediting the price of his old car, what equal payments for 15 months is necessary in order for the balance to be repaid at 6% compounded monthly?
Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $204,000. It is expected to generate $30,000 of annual cash flows, provide incremental cash revenues of $125,080, and incur incremental cash expenses of $70,000 annually. What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place. Payback period fill in the blank 1 years ARR fill in the blank 2%
You have just received a windfall from an investment you made in a friend’s business. You will receive end-of-year cash flows of $14,050, $3,250 and $16,480 for years 1 to 3, respectively. If the annual discount rate is 6%. a) What is the value of your windfall today? b) What is the value of your windfall at the end of year 3?
Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $56,000. The annual cash inflows for the next three years will be: Year 1 2 3 Cash Flow $ 28,000 26,000 21,000 Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the financial calculator method. a. Determine the internal rate of return. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return %
Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $36,000. The annual cash inflows for the next three years will be: Year 1 2 3 Cash Flow $ 18,000 16,000 11,000 Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the financial calculator method. a. Determine the internal rate of return. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return % b. With a cost of capital of 12 percent, should the equipment be purchased? O Yes O No