FIN 370T Wk 5 – Practice: Ch. 12 and 13 Knowledge Check

Click Here To Download Your Files :

https://hwsell.com/category/fin-370/

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

You can buy more tutorials from the below link

https://www.hwsell.com/

FIN 370T Wk 5 – Practice: Ch. 12 and 13 Knowledge Check

Which of the following is NOT included when calculating the depreciable basis for real property?

Multiple Choice

•      Freight charges for item
•      Sales tax paid for item
•      Financing fees
•      Installation and testing fees

A new project would require an immediate increase in raw materials in the amount $6,000. The firm expects that accounts payable will automatically increase $2,000. How much must the firm expect its investment in net working capital to increase if they accept this project?

Multiple Choice

•      −$6,000
•      −$4,000
•      +$4,000
•      +$6,000

Suppose you sell a fixed asset for $99,000 when its book value is $129,000. If your company's marginal tax rate is 39 percent, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?

Multiple Choice

•      $80,700
•      $110,700
•      $77,300
•      $84,800

Concerning incremental project cash flow, which of these is a cost one would never count as an expense of the project?

Multiple Choice

•      Initial investment
•      Taxes paid
•      Operating expenses of the project
•      Financing costs

If a firm has already paid an expense or is obligated to pay one in the future, regardless of whether a particular project is undertaken, that expense is a(n):

Multiple Choice

•      incremental cash outflow.
•      opportunity cost.
•      sunk cost.
•      expensible item.

Effects that arise from a new product or service that decrease sales of the firm's existing products or services are referred to as:

Multiple Choice

•      complementary effects.
•      substitutionary effects.
•      sunk effects.
•      marginal effects.

Your company is considering a new project that will require $2,000,000 of new equipment at the start of the project. The equipment will have a depreciable life of 10 years and will be depreciated to a book value of $250,000 using straight-line depreciation. The cost of capital is 12 percent, and the firm's tax rate is 39 percent. Estimate the present value of the tax benefits from depreciation.

Multiple Choice

•      $68,250
•      $106,750
•      $175,000
•      $385,628

Your company is considering a new project that will require $100,000 of new equipment at the start of the project. The equipment will have a depreciable life of 10 years and will be depreciated to a book value of $5,000 using straight-line depreciation. The cost of capital is 14 percent, and the firm's tax rate is 30 percent. Estimate the present value of the tax benefits from depreciation.

Multiple Choice

•      $14,865.93
•      $14,030.79
•      $15,017.25
•      $15,997.13

Your company is considering a new project that will require $10,000 of new equipment at the start of the project. The equipment will have a depreciable life of five years and will be depreciated to a book value of $3,000 using straight-line depreciation. The cost of capital is 9 percent, and the firm's tax rate is 34 percent. Estimate the present value of the tax benefits from depreciation.

Multiple Choice

•      $476
•      $924
•      $1,400
•      $1,851