Berringer Company Is Considering an Investment That Will Generate Cash

question 65

Essay

Berringer Company is considering an investment that will generate cash revenues of $100,000 per year for 8 years,and have cash expenses of $70,000 per year for 8 years.The cost of the asset is $80,000,and it will be depreciated using straight-line depreciation over its 8 year life.Berringer pays income taxes at a rate of 30%.The cost of capital is 12%
Required:
a.Prepare an analysis showing the annual after tax cash flow associated with this asset.
b.Compute the net present value of this investment using the cash flow you computed in a above.

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Definitions:

Reproductive Organs

Structures involved in the production of offspring, including organs such as the ovaries and testes in humans.

Sperm Cells

The male reproductive cells responsible for fertilizing a female egg, leading to conception.

Epididymis

An elongated structure attached to the back of the testes and in which sperm cells mature.

Urethra

The tube that carries urine from the bladder to the outside of the body in both sexes, and also conveys semen in males.