Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

a. What is the initial outlay associated with this project? (Round to the nearest dollar.) b. If your sales forecast is 10,000 skateboards per year,

image text in transcribed

a. What is the initial outlay associated with this project? (Round to the nearest dollar.)

b. If your sales forecast is 10,000 skateboards per year, what are the annual free cash flows associated with this project for years 1 through 9 (note that the cash flows for years 1 through 9 are equal)? (Round to the nearest dollar.)

If your sales forecast is 3,000 skateboards per year, what are the annual free cash flows associated with this project for years 1 through 9 (note that the cash flows for years 1 through 9 are equal)? (Round to the nearest dollar.)

If your sales forecast is 13,000 skateboards per year, what are the annual free cash flows associated with this project for years 1 through 9 (note that the cash flows for years 1 through 9 are equal)? (Round to the nearest dollar.)

What are the expected annual free cash flows for years 1 through 9 (note that the cash flows for years 1 through 9 are equal)?(Round to the nearest dollar.)

c. If your sales forecast is 10,000 skateboards per year, what is the terminal cash flow in year 10 (that is, what is the free cash flow in year

10 plus any additional cash flows associated with the termination of the project)? (Round to the nearest dollar.)

If your sales forecast is 3,000 skateboards per year, what is the terminal cash flow in year 10 (that is, what is the free cash flow in year 10 plus any additional cash flows associated with the termination of the project)? (Round to the nearest dollar.)

If your sales forecast is 13,000 skateboards per year, what is the terminal cash flow in year 10 (that is, what is the free cash flow in year 10 plus any additional cash flows associated with the termination of the project)? (Round to the nearest dollar.)

What is the expected terminal cash flow in year 10? (Round to the nearest dollar.)

d. Using the expected free cash flows, what is the project's NPV given a required rate of return of 10 percent? (Round to the nearest dollar.)

What would the project's NPV be if they sold 10,000 skateboards? (Round to the nearest dollar.)

when the project is shut down. Finally, assume that the firm's marginal tax rate is 21 percent. a. What is the initial outlay associated with the project? b. What are the annual free cash flows associated with the project for years 1 , and 2 through 9 under each sales forecast? What are the expected annual free cash flows for year 1 , and years 2 through 9 ? c. What is the terminal cash flow in year 10 (that is, what is the free cash flow in year 10 plus any additional cash flows associated with the termination of the project)? d. Using the expected free cash flows, what is the project's NPV given a required rate of return of 10 percent? What would the project's NPV be if 10,000 skateboards were sold? a. What is the initial outlay associated with this project? (Round to the nearest dollar.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Complete Guide To Capital Markets For Quantitative Professionals

Authors: Alex Kuznetsov

1st Edition

0071468293, 978-0071468299

More Books

Students also viewed these Finance questions

Question

List the advantages and disadvantages of the pay programs. page 505

Answered: 1 week ago