1. Evans Enterprises is in the 30% tax bracket. The company has earnings before depreciation and taxes of $82,000 and depreciation of $45,000.
Determine the after-tax cash flows for the company.
a. $42,000
b. $72,800
c. $82,000
d. $70,900
e. $68,500
2. Determine the net present value of the following project:
Assume the project has an initial cost of $9,500. The project will generate cash flows for three years, with cash inflow amounts of $1,500, $1,500, and $10,000. Assume a discount rate of 9%.
a. Between $0 and $400
b. Less than $0
c. Between $400 and $800
d. More than $800