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Craig's Car Wash Inc. is considering a project that has the following cash flow and cost...

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Finance

Craig's Car Wash Inc. is considering a project that has thefollowing cash flow and cost of capital (r) data. What is theproject's discountedpayback?

r.10.00%
Year

0

1

2

3

Cash flows

?$900

$500

$500

$500

a. 2.09 years
b. 1.88 years
c. 2.52 years
d. 2.78 years
e. 2.29 years

You have just landed an internship in the CFO's office ofHawkesworth Inc. Your first task is to estimate the Year 1 cashflow for a project with the following data. What is the Year 1 cashflow?

Sales revenues

$13,000

Depreciation

$4,000

Other operating costs

$6,000

Tax rate

35.0%

a. $5,950
b. $6,407
c. $6,251
d. $6,099
e. $6,568

Your new employer, Freeman Software, is considering a newproject whose data are shown below. The equipment that would beused has a 3-year tax life, and the allowed depreciation rates forsuch property are 33.33%, 44.45%, 14.81%, and 7.41% for Years 1through 4. Revenues and other operating costs are expected to beconstant over the project's 10-year expected life. What is the Year1 cash flow?

Equipment cost (depreciable basis)

$65,000

Sales revenues, each year

$60,000

Operating costs (excl. deprec.)

$25,000

Tax rate

35.0%

a. $33,442
b. $36,869
c. $31,849
d. $35,114
e. $30,333

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