Forecasted future cash flows.

AllSports Ltd manufactures and sells athletic tournament products to global wholesalers from its base in south Asia. AllSports Ltd is evaluating a new product, with a three-year life, that will require investment in new, dedicated equipment and rental of additional space. AllSports Ltd will borrow the funds to purchase the dedicated equipment. Product sales of this type normally peak in the second year (the tournament year) and drop dramatically thereafter. The following table summarises data values for the evaluation of the new product, a souvenir for the Pan American Games.

Required:
1. Prepare a loan payment schedule for the equipment purchase using Excel’s PMT()
function.
2. Estimate after tax financing and operating cash flows for the life of the new product.

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AllSports Ltd data values Purchase of dedicated e uipment E uipment life E uipment salva e value Financin or in capital re uired for pro ect Do n payment one uipment E uipment loan rate Discount opportunity rate ax rate Ne space needed Ne rental cost Variable costs Forecasts for the product life in year: nit sales forecast Sales price per unit 800 000 purchase price 3 years 50 000 per year committed at the be innin of the 100 000 pro ect and returned at the end 25 of e uip price 6 per year 8 per year 40 on operatin income 1200 s meters 35 00 per s meter 1.80 per unit 200 000 3 50 2 3 350 000 375 140 000 3.00