Exam 3 Practice

Free cash flows of the project for next five years can be calculated by adding depreciation values and subtracting changes in working capital from net income. In 2010, there will be a cash outflow of $2.2 million as capital expenditure. In 2011, there will be an additional one time cash outflow of $300,000 as an advertising expense. Using net free cash flow values for next five years and discount rate for discounting, NPV for the project comes out to be $2907, 100. The rate of return at which net present value becomes zero i.e.

The election to itemize is appropriate when total itemized deductions are less than the standard deduction based on the taxpayer’s filing status.

As the health care delivery system developed in the US, it emphasized specialization over primary care.

Project A: This project is new to your company. You do not feel confident in estimating the project costs using internal resources. There are other companies that have done this type of work. Yet you still want the most accurate estimates possible.

Paired comparisons may be from one individual – before and after samples - or from different individuals who have been matched for some characteristic, e.g. sex, age, height etc. In this question, we are looking at “healthcare workers”. The needle-stick observations of healthcare workers share a link that makes them similar to one another and allows the researcher to “compare” needle-stick injuries in various settings, e.g. “all healthcare facilities” including in community and tertiary-care hospitals.

Which of the following files is edited to block a search engine’s bots from indexing

| 8. Caitlin had $402 in her bank account. She withdrew $15 each week to pay for a swimming lesson. She now has $237.

1.) What are the recommended percentages of each project that HVC should fund and the net present value of the total investment?

1. Determine the Weighted Average Cost of Capital (WACC) based on using retained earnings in the capital structure.

Moreover, let’s calculate the Weighted Average Cost of Capital (WACC). And in order to calculate it we need to know the capital structure of the company. Knowing the capital structure of the

Thus the cost of capital can be easily calculated using the weighted average cost of capital formula (13.69%).

Weights of Debt and equity are 8.3 and 91.7%. Now, plugging all the values in, we can derive company’s Weighted Average Cost of Capital.

6.The Year 0 net investment outlay for the project is $-475,000. This computed by adding the price of the machinery, installation, shipping, and the change in net working capital. The non-operating cash flow when the project is

The use of an accounting rate of return also underscores a project 's true future profitability because returns are calculated from accounting statements that list items at book or historical values and are, thus, backward-looking. According to the ARR, cash flows are positive due to the way the return has been tabulated with regard to returns on funds employed. The Payback Period technique also reflects that the project is positive and that initial expenses will be retrieved in approximately 7 years. However, the Payback method treats all cash flows as if they are received in the same period, i.e. cash flows in period 2 are treated the same as cash flows received in period 8. Clearly, it ignores the time value of money and is not the best method employed. Conversely, the IRR and NPV methods reflect that The Super Project is unattractive. IRR calculated is less then the 10% cost of capital (tax tabulated was 48%). NPV calculations were also negative. We accept the NPV method as the optimal capital budgeting technique and use its outcome to provide the overall evidence for our final decision on The Super Project. In this case IRR provided the same rejection result; therefore, it too proved its usefulness. Despite that, IRR is not the most favorable method because it can provide false results in the case where multiple negative

Weight of Equity = 71%; Equity Cost of Capital = 12%; Weight of Debt = 29%; Debt Cost of Capital = 4.55%