our firm is considering a project with a five-year life and an initial cost of $120000. Thediscount rate for the project is 12%. The firm expects to sell 2100 units a year. The cash flowper unit is $20. The firm will have the option to abandon this project after three years at whichtime it expects it could sell the project for $50000. You are interested in knowing how theproject will perform if the sales forecasts for years four and five of the project are revised suchthat there is a 50% chance that the sales will be either 1400 or 2500 units a year. What is thenet present value of this project given your sales forecasts?a. $23617b. $23719c. $25002d. $26877e. $2874625- Ronnies Custom Cars purchased some fixed assets two years ago for $39000. The assets areclassified as 5-year property for MACRS. Ronnie is considering selling these assets now so hecan buy some newer fixed assets which utilize the latest in technology. Ronnie has beenoffered $19000 for his old assets. What is the net cash flow from the salvage value if the taxrate is 34%?our firm is considering a project with a five-year life and an initial cost of $120000. Thediscount rate for the project is 12%. The firm expects to sell 2100 units a year. The cash flowper unit is $20. The firm will have the option to abandon this project after three years at whichtime it expects it could sell the project for $50000. You are interested in knowing how theproject will perform if the sales forecasts for years four and five of the project are revised suchthat there is a 50% chance that the sales will be either 1400 or 2500 units a year. What is thenet present value of this project given your sales forecasts?a. $23617b. $23719c. $25002d. $26877e. $2874625- Ronnies Custom Cars purchased some fixed assets two years ago for $39000. The assets areclassified as 5-year property for MACRS. Ronnie is considering selling these assets now so hecan buy some newer fixed assets which utilize the latest in technology. Ronnie has beenoffered $19000 for his old assets. What is the net cash flow from the salvage value if the taxrate is 34%?

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