Exam 9: Using Discounted Cash Flow Analysis to Make Investment Decisions

A project generates revenues of $5,000; cash expenses of $2,600; and depreciation charges of $800.The firm's tax rate is 40%.Using the following data calculate cash flows from operations using three different methods

What is the NPV of a project that costs $100,000, provides $23,000 in cash flows annually for six years, requires a $5,000 increase in net working capital, and depreciates the asset at 15 percent declining balance over six years and sold at zero salvage value? The discount rate is 14 percent.The tax rate is 40 percent.

Which of the following categories would be least likely to require annual adjustments in a capital budgeting analysis due to the effects of inflation?