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Social Science Clinic => Business => Finance => Topic started by: fagboi on Jul 9, 2019

Title: Use the table for the question(s) below.Year 0Year 1Year 2Year 3Revenues400,000400,000400,000-Cost ...
Post by: fagboi on Jul 9, 2019
Use the table for the question(s) below.

Year 0Year 1Year 2Year 3
Revenues400,000400,000400,000
-Cost of Goods Sold-180,000-180,000-180,000
​
-Depreciation-100,000-100,000-100,000
=EBIT120,000120,000120,000
​
-Taxes (35%)-42,000-42,000-42,000
=Unlevered net income78,00078,00078,000
​
+Depreciation100,000100,000100,000
​
-Additions to Net Working Capital-20,000-20,000-20,000
​
-Capital Expenditures-300,000
=Free Cash Flow158,000158,000158,000
​


Visby Rides, a livery car company, is considering buying some new luxury cars. After extensive research, they come up with the above estimates of free cash flow from this project. By how much could the discount rate rise before the net present value (NPV) of this project is zero, given that it is currently 10%?
◦ by 22%
◦ by 17%
◦ by 27%%
◦ by 25%
Title: Use the table for the question(s) below.Year 0Year 1Year 2Year 3Revenues400,000400,000400,000-Cost ...
Post by: izzat on Jul 9, 2019
by 17%
Title: Re: Use the table for the question(s) below.Year 0Year 1Year 2Year 3Revenues400,000400,000400,000-Co
Post by: yuanxiao zheng on Apr 22, 2020
thank you