Problem 10.04 – Calculating OCF
Fundamentals of Corporate Finance
Ross, Westerfield, and Jordan
13th Edition
Fill in the missing numbers, calculate OCF, then find the depreciation tax shield.
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Fill in the missing numbers, calculate OCF, then find the depreciation tax shield.
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Use the different approaches to calculate operating cash flow.
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Figure out the annual depreciation and the book values for the end of the year.
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Find the after-tax cash flow from selling the asset.
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Find the aftertax salvage value.
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Find the operating cash flow of the project.
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Find the NPV for the project.
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Find the project’s IRR.
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Find the project’s equivalent annual cost.
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Find the equivalent annual cost for both machines and then decide which one you would choose.
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