Operating cash flows Net income Depreciation 7 million Operating cash flows for

# Operating cash flows net income depreciation 7

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Operating cash flows = Net income + Depreciation = \$7 million Operating cash flows for the first year = \$1.20 million + \$4 million = \$5.20 million Cost of equipment = \$12 million Depreciation already charged = \$12 million * 75% = \$9 million Current book value of the equipment= Cost – Depreciation charged = \$12 million - \$9 million = \$3 Sale value of the equipment today = \$4 million Gain on sale of equipment = Sale value – Current book value = \$4 million - \$3 million = \$1 million Tax payable on the gain on sale of equipment = \$1 million * 40% = \$0.40 million After tax net salvage value = Sale value of equipment – Tax payable on gain on sale = \$4 million - \$ (11-2). Operating Cash Flow \$ 9 million \$ 4 million \$ 3 million The company faces a 40% tax rate. What is the project’s operating cash flow for the first year (t=1 (11-3). Net Salvage Value Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cos been depreciated. The used equipment can be sold today for \$4 million, and its tax rate is 40%. W salvage value?
Truck Pulley 5100 7500 5100 7500 5100 7500 5100 7500 5100 7500 ct accept-reject decision for each. 4434.782609 3856.332703 3353.332785 2915.941553 2535.60135 17095.991 17508.71294 17095.991 and an overhead pulley system, in this year’s capital budget. The projects are independen . The firm’s cost of capital is 14%. After-tax cash flows, including depreciation, are as follo
% 6355.932203 6250 5386.383223 5208.333 4564.731545 4340.278 3868.416564 3616.898 3278.319122 3014.082 23453.78266 22429.59 % oving materials in its factory. y exclusive investments.) The whereas the gas-powered truck will f truck is estimated to be 6 years, se for the gas-powered truck will be R for each type of truck, and decide
2 3 4 5 \$3,000 \$3,000 \$3,000 \$3,000 2 3 4 5 \$7,400 \$7,400 \$7,400 \$7,400 Preferred project Project L Project S Project S Project S n. ar for 5 years. Project L costs \$25,000 and is expected to produce cash flows of \$7,400 per year for 5 year d, assuming they are mutually exclusive, using each ranking method? Which should be actually selected?
ar of the roll-out of its new proposed service: million 3 million \$0.40 million = \$3.60 million 1)(t=1)? st \$12 million, of which 75% has What is the equipment’s after-tax net
nt. The ows:
rs. Calculate the two projects’

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