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( 2 0 points ) Your firm is considering a new project of manufacturing healthy chocolate bars, the details of information are given below: A
points Your firm is considering a new project of manufacturing healthy chocolate bars, the details of information are given below: A new machine costing $ million is required at In addition, the company needs to invest $ million to build a new manufacturing plant at The project requires an initial investment at into net working capital equal to of predicted firstyear sales, Subsequently, net working capital is of the predicted sales over the following years, and can be fully recovered at the end of the project end of year The machine is being depreciated to zeno for tax purposes using the year straightline method. The machine can be sold at the end of the project end of year for $ The plant is being depreciated to zero for tax purposes using the year straightline method. The plant can be sold at the end of the project end of year for $ million. Sales of chocolate bars arc expected to be $ million per year for the next four years. The company expects total manufacturing costs to be of sales each year, and the employec annual costs salary and related costs for this project to be $ million. In addition, the annual advertising costs of the company will increase from $ million to $ million. The corporate tax rate is The company has a target debtcquity ratio of its cost of equity is and its cost of debt is What is the aftertax salvage value of plant and machine, respectively? Estimate the annual free cash flow from this project This new project is somewhat riskier than a typical project for the company Management uses the subjective approach and applies an adjustment factor of to account for this increased riskiness. Calculate the appropriate discount rate to use when evaluating the new project. Estimate the NPV of this project
points Your firm is considering a new project of manufacturing healthy chocolate bars, the details of information are given below:
A new machine costing $ million is required at In addition, the company needs to invest $ million to build a new manufacturing plant at
The project requires an initial investment at into net working capital equal to of predicted firstyear sales, Subsequently, net working capital is of the predicted sales over the following years, and can be fully recovered at the end of the project end of year
The machine is being depreciated to zeno for tax purposes using the year straightline method. The machine can be sold at the end of the project end of year for $
The plant is being depreciated to zero for tax purposes using the year straightline method. The plant can be sold at the end of the project end of year for $ million.
Sales of chocolate bars arc expected to be $ million per year for the next four years. The company expects total manufacturing costs to be of sales each year, and the employec annual costs salary and related costs for this project to be $ million. In addition, the annual advertising costs of the company will increase from $ million to $ million.
The corporate tax rate is
The company has a target debtcquity ratio of its cost of equity is and its cost of debt is
What is the aftertax salvage value of plant and machine, respectively?
Estimate the annual free cash flow from this project
This new project is somewhat riskier than a typical project for the company Management uses the subjective approach and applies an adjustment factor of to account for this increased riskiness. Calculate the appropriate discount rate to use when evaluating the new project.
Estimate the NPV of this project
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