Expert Answers

1) Year 0 total investment outlay is $400,000. Year 1-4 operating cash flow is $120,000 per year. Total termination cash flow is $55,000. WACC is 9.7%. -What is NPV?

2) If this project had a lower than average risk, what would happen to this NPV?

3) If average risk and opportunity cost of $10,000, what would be the new NPV?

4) A project with $340,000 investment in NOWC, recovered fully at end of products life in 5 years. At that time, required equipment will not be depreciated fully and still have a book value of $100,000. Tax rate is 40%.  If salvage value turns out to be $100,000, what was the projects total termination cash flow?

5) If in 5 years the company is able to get $140,000 for the equipment even though book value of $100,000, What is the terminal year cash flow now?

6) What if its sold for $30,000 in 5 years, whats the terminal year cash flow?