Purchase Solution

# Capital Budgeting: Analyzing a New Project

Not what you're looking for?

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 Summary

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

##### 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 provided by:
###### Education
• Chartered Accountant (Equivalent to CPA in US), Institute of Charted Accountants of India
• Bachelor of Commerce, West Bengal University
###### Recent Feedback
• "I got this feedback and I wanted to know if you can explain it to me. I noticed something within your workings which I believe is incorrect.  It looks like you've mistaken the Debt ratio for the Equity Multiplier.  You've done a calculation to determine Return on Equity (ROE) but if you take a look at the ratios provided for us you'll see ROE listed on the bottom line already.  You can use ROE, Profit Margin and Total Asset Turnover to figure out the Equity Multiplier amount.  Equity multiplier is not provided for us and we need to calculate it.  I really hope this is helpful to you.  "
• "Very attentive to detail. Answers are designed in easy to understand format."
• "Fast response and thorough answer"
• "thank you very much! "
• "thank you so much !!!!!!!"

##### SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

##### Basics of corporate finance

These questions will test you on your knowledge of finance.

##### Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

##### IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

##### Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce