Repeat all the steps in the video Forecasting Incremental Earnings. Linksys is considering the development of...
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Repeat all the steps in the video "Forecasting Incremental Earnings". Linksys is considering the development of a wireless home networking appliance, called HomeNet. Sales forecast for HomeNet is 50,000 units per year. Linksys expects the product will have a four-year life and an expected wholesale price of $220. Actual production will be outsourced at a cost of $110 per unit. Linksys will rent the lab space but will need to purchase $7.5 million of new equipment. The lab will be operational at the end of one year. Linksys expects to spend $2.8 million per year on rental costs for the lab space. The lab equipment will be depreciated using the straight-line method over a 5-year life. Linksys' marginal corporate tax rate is 40%. The cost of capital for this project is 12.00% How much is the "Year 1 to Year 4" incremental earnings for this project (in millions)? Enter your answer in the following format: + or - 1.23; Hint #1: Answer is between 0.60 and 0.82 Repeat all the steps in the video "Forecasting Incremental Earnings". Linksys is considering the development of a wireless home networking appliance, called HomeNet. Sales forecast for HomeNet is 50,000 units per year. Linksys expects the product will have a four-year life and an expected wholesale price of $220. Actual production will be outsourced at a cost of $110 per unit. Linksys will rent the lab space but will need to purchase $7.5 million of new equipment. The lab will be operational at the end of one year. Linksys expects to spend $2.8 million per year on rental costs for the lab space. The lab equipment will be depreciated using the straight-line method over a 5-year life. Linksys' marginal corporate tax rate is 40%. The cost of capital for this project is 12.00% How much is the "Year 1 to Year 4" incremental earnings for this project (in millions)? Enter your answer in the following format: + or - 1.23; Hint #1: Answer is between 0.60 and 0.82
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