Tom is evaluating a project that costs $3,500,000, has a five-year life, and has no salvage value.
Question:
Tom is evaluating a project that costs $3,500,000, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 125,000 units per year, price per unit is $65, variable cost per unit is $40, and fixed costs are $2 million per year. The tax rate is 21%, and the required rate of return on the project is 10%. 1.)Calculate the annual operating cash flow for the project. (Round to 2 decimals) 2.)Calculate the NPV for the project. (Round to 2 decimals) 3.)Calculate the accounting break-even number of units for the project. (Round to 2 decimals)
4.)Calculate the equivalent annual cost for the project. (Enter a positive value and round to 2 decimals)
5.)Calculate the financial break-even number of units for the project. (Round to 2 decimals)
Corporate Finance Core Principles And Applications
ISBN: 9781260571127
6th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan