CJ Nickel Co. is evaluating a 5-year project that has a €250,000 net present value. If the cost of capital is 15%, what is the equivalent annual annuity for the project?

To a financial analyst the relevant measure of inflows and outflows is:

Financing costs are ignored in the calculation of cash flows in capital budgeting analysis because:

Noble Products is considering buying a dough machine to help out in its bread products line. The machine will cost €100,000 and will be depreciated using straight-line depreciation over 5 years to a zero ending book value. The machine will increase revenues by €30,000 per year with no change in expense levels. At the end of the fifth year, Noble expects to sell the dough machine for €10,000. Noble is subject to the 34% marginal tax rate. Assume a 10% cost of capital.

What is the annual increase in cash flow due to increased revenue?

Noble Products is considering buying a dough machine to help out in its bread products line. The machine will cost €100,000 and will be depreciated using straight-line depreciation over 5 years to a zero ending book value. The machine will increase revenues by €30,000 per year with no change in expense levels. At the end of the fifth year, Noble expects to sell the dough machine for €10,000. Noble is subject to the 34% marginal tax rate. Assume a 10% cost of capital.

What is the present value of the cash flow from the sale of the dough machine at the end of the 5 year period? Round to the nearest euro.

The Dinosaur Company purchased €200,000 worth of equipment 5 years ago. The equipment is expected to have a depreciable life of 10 years and the firm planned on using straight-line depreciation on the asset. The equipment is being depreciated to an ending book value of €20,000.

If Dinosaur sells the equipment at the end of year 6 for €100,000 then what is the gain or loss on the sale?

Two firms have identical EBITDA but Firm A has €80 more cash flow than Firm B. Both firms are subject to the same 32% marginal tax rate. If the difference between the two cash flows is related to differing depreciation expense levels, which of the following is a possibility for the difference?

The Dinosaur Company purchased €200,000 worth of equipment 5-years ago. The equipment is expected to have a depreciable life of 10-years and the firm planned on using straight-line depreciation on the asset. The equipment is being depreciated to an ending book value of €20,000.

Noble Products is considering buying a dough machine to help out in its bread products line. The machine will cost €100,000 and will be depreciated using straight-line depreciation over 5 years to a zero ending book value. The machine will increase revenues by €30,000 per year with no change in expense levels. At the end of the fifth year, Noble expects to sell the dough machine for €10,000. Noble is subject to the 34% marginal tax rate. Assume a 10% cost of capital. What is the present value of all of the cash flows from the end of the 5 year period? Round to the nearest euro.

ShowLow Co. is evaluating a 4-year project that has a €1,000,000 net present value. If the cost of capital is 13%, what is the equivalent annual annuity for the project?