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Unformatted text preview: 5.8 million Depreciation 2.9 million Interest expense 1.8 million Hoovers financial staff has also determined that this project would cannibalize one of the firms other projects by $1.4 million of cash flow (before taxes) per year. Hoover has a 40 percent tax rate, and its WACC is 12 percent. Calculate the projects operating cash flow for Year 1. Student response: Percent Value Correct Response Student Response Answer Choices 0.0% a. $1,680,000 0.0% b. $2,520,000 0.0% c. $5,420,000 100.0% d. $4,580,000 0.0% e. $3,500,000 Score:1 / 1 Question 3 (1 point) Lincoln Manufacturing is now in the final year of a project. The equipment originally cost $50 million, of which 90 percent has been depreciated. Lincoln can sell the used equipment today for $7 million, and its tax rate is 45 percent. What is the equipments after-tax net salvage value? Student response: 100.0% a. $6,100,000...
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This note was uploaded on 07/25/2011 for the course FINC 3334 taught by Professor Whitworth during the Winter '10 term at University of Houston.
- Winter '10