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Which of the following would decrease the NPV of a project




Question;Which of the;following would decrease the NPV of a project being considered, other things;held constant?;A. A decrease in;the cost of capital for the project;B. A decrease in;net working capital in year 1;C. Making the;initial investment in the first year rather than spreading it over the first 3;years;D. All of the;above would increase the NPV of a project;E. A shift from;straight line to MACRS depreciation method;Your company is;considering a new project whose data are shown below. The required equipment;has a 3-year tax life, and the MACRS rates for such property are 33%, 45%, 15%;and 7% for Years 1 through 4. Revenues and other operating costs are expected;to be constant over the project's 10-year expected operating life. What is the;project's Year 4 cash flow?;Equipment cost;(depreciable basis) $70,000;Sales revenues;each year $42,500;Operating costs;(excluding depreciation) $25,000;Tax rate 35.0%;A. $14,432;B. $13,090;C. $11,814;D. $12,436;E. $13,745;Falcon Ski;Corp.has the following data, in thousands. Assuming a 365-day year, what is the;firm's cash conversion cycle?;Annual sales;$45,000;Annual cost of;goods sold $31,500;Inventory $4,000;Accounts;receivable $2,000;Accounts payable;$2,400;A. 31 days;B. 35 days;C. 38 days;D. 28 days;E. 25 days;Firms U and L;each have the same amount of assets, investor-supplied capital, and both have a;return on investors' capital (ROIC) of 12%. Firm U is unleveraged, i.e., it is;100% equity financed, while Firm L is financed with 50% debt and 50% equity.;Firm L's debt has an after-tax cost of 8%. Both firms have positive net income;and a 35% tax rate. Which of the following statements is CORRECT?;A. Firm L has a;lower ROE than FIrm U.;B. Firm L has a;lower ROA than Firm U.;C. Firm L has a;higher times interest earned ratio.;D. Firm L has a;higher EBIT than Firm U.;E. The two;companies have the same times interest earned ratio.


Paper#47751 | Written in 18-Jul-2015

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