LP4 Assignment: Case Study
Instructions
: Read and complete the Integrative Case 5: Lasting Impression. Be sure to thoroughly answer the To Do items a, b, c, e, and f.
Answer
Question a (i)Generally, initial investment represents the amount of money that an individual or organization uses to start a project. It is usually the sum of the cost of the project and the installation fee. Based on project A and B, the initial investment is as follows;Project AProject cost (830,000) + installation cost (40,000) = Initial investment ($870,000).Project BProject cost (640,000) + installation cost (20,000) = Initial investment ($660,000).Question a (ii)Operating cash flow (OCF) is the sum of the depreciation tax shield and the net incomeYearRateProject AProject B870000660000120174000132000232278400211200319.2167040126720411.5210022476032511.521002247603265.765011238016OCF for project A is 920,112, while that of project B is 698,016.b) For project A, its cash flow stream af...
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