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35. For a new process, the land was purchased for $10 million. The fixed capital investment, paid at the end of year 0, is $165
35. For a new process, the land was purchased for $10 million. The fixed capital investment, paid at the end of year 0, is $165 million. The working capital is $15 million, and the salvage value is $15 million. The estimated revenue from years 1 through 10 is $70 million/y, and the estimated cost of manufacture over the same time period is $25 million/y. The internal hurdle rate (interest rate) is 14% p.a., before taxes, and the taxation rate is 40%. a. Draw a discrete, nondiscounted cash flow diagram for this process. b. Determine the yearly depreciation schedule using the five-year MACRS method. c. Determine the after-tax profit for each year. d. Determine the after-tax cash flow for each year. e. Draw a discrete, discounted (to year 0) cash flow diagram for this process. f. Draw a cumulative, discounted (to year 0) cash flow diagram for this g. What is the present value (year 0) of this process? process
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