1. List the stages in the capital budgeting process?
2. What is the payback period for Sweetbay Supermarket's new project if its initial after-tax cost is $5,000,000 and it is expected to provide after-tax operating cash flows of $1,800,00 in year 1, $1,900,000 in year 2, $700,000 in year 3, and $1,800,000 in year 4?
3. For a capital budgeting proposal, assume this year's cash sales are forecast to be $220, cash expense $130, and depreciation
$80. Assume the firm is in 30% tax bracket. Using the methods discussed in the chapter, determine the project's after-tax cash flow.
4. The Brassy Fin Pet Shop is considering and expansion. Construction will cost $90,000 and will be departed to zero, using straight-line depreciation,over 5 years. Earnings before depreciation are expected to be $20,000 in each of the next 5 years. The firm's tax rate is 34%. What are the project's cash flows?