Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $803,600.00 work

image text in transcribed ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $803,600.00 work cell. Further, it will cost the firm $57,900.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20 -year useful life. The project will require new employees to be trained at a cost of $65,200.00. The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $5,000.00. Finally, the firm will invest $10,700.00 in net working capital to ensure the project has sufficient resources to be successful. The project will generate annual sales of $919,000.00 with expenses estimated at 39.00% of sales. Net working capital will be held constant throughout the project. The tax rate is 40.00%. The work cell is estimated to have a market value of $450,000.00 at the end of the fourth year. The firm expects to reclaim 83.00% of the final NWC position. The cost of capital is 12.00%. What is the terminal cash flow for the project

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Finance questions