Business Finance Homework Help
Business Finance Homework Help. calculate the following cash flows associated with the project: (1) Net initial investment outlay; (2) Net operating cash flows (NOCF) (3) Net Salvage value.
You have the following cost and revenue information on a project that invests in the conversion of a coal-fired electricity generating plant into a gas-fired unit.
Cost of new equipment: $200 million.
The equipment will be depreciated over 5 years on a straight-line basis to 20 million book value.
Proceeds from the sale of old equipment which has a book value of $10 m. is 20 million.
Expensed installation cost: 0.50 million.
Estimated Revenue from the sale of electricity in the first year: $70 million.
Cost of gas: $20 million.
Operating and other expenses: $5 million.
Initial working capital expenses: $1 million.
Project’s assets estimated resale value: $40 million.
The project is subject to a tax rate of 30%.
Anticipated clean-up expense: $1 million.
Investment tax credit: 0.5 million.
Using the data, calculate the following cash flows associated with the project: (1) Net initial investment outlay; (2) Net operating cash flows (NOCF) (3) Net Salvage value.
Net initial investment outlay:
-Io – W –(1-t)E0 + [So – t(S0-B0] + Ic
Net operating cash flow:
(1-t)(R – C) + t(D)
Net salvage value:
S – t(S – B) – (1 – t)REX + W
Business Finance Homework Help
"Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!"
