Explore BrainMass

# Capital Budgeting: Analyzing a New Project

Not what you're looking for? Search our solutions OR ask your own Custom question.

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

1.) You work for the Sing Oil Company, which is considering a new project whose data are shown below. What is the project's operating cash flow for Year 1?

Sales revenues, each year \$55,000
Depreciation \$8,000
Other operating costs \$25,000
Interest expense \$8,000
Tax rate 35.0%
2) (Comp: 12.1-12.4) Salvage value calculations

2.) Bing Services is now in the final year of a project. The equipment originally cost \$20,000, of which 75% has been depreciated. Bing can sell the used equipment today for \$6,000, and its tax rate is 40%. What is the equipment's net after-tax salvage value for use in a capital budgeting analysis? Note that if the equipment's final market value is less than its book value, Bing will receive a tax credit as a result of the sale.

#### Solution Preview

** Please see the attached file for the complete solution response **

1
Sales Revenue \$55,000
Operating Cost \$25,000
Depreciation \$8,000
Interest Expense \$8,000 ...

#### Solution Summary

This solution provides a detailed a computation of the given accounting problem in Excel.

\$2.49