After graduating with a marketing degree, you follow in the path of many before you and start your career as a barista. Congrats! After one week you quickly quit and decide to start your own small business plowing snow. You will need to buy a used Ford F350 truck at a local Ford dealer for $47,000. The truck should last for 10 years and will be depreciated to $5,000. Going rates for snow plowing residential driveways in Niles, IL is $30 per snowfall. Snow is expected to fall in the area 20 times per winter. You estimate you can plow the following number of driveways: Year 1 = 250; Year 2 = 275; Year 3 = 275; Year 4 = 325; Year 5 = 350 Your cost of goods as a percent of revenues is estimated constantly at 59%. Your S,G,&A as a percent of revenues is estimated at 33%. The corporate tax rate applicable to your company is 25%. Assume an opportunity cost of capital of 10%. 1. What is the amount of revenues in Year 1 (rounded to the nearest dollar). 2. What is the amount of Gross Profit in Year 2 (rounded to the nearest dollar)? 3. What is the amount of Sales, General, and Administrative Expense in Year 3 (rounded to the nearest dollar)? 4. What is the amount of Depreciation Expense in Year 4 (rounded to the nearest dollar)? 5. What is the amount of Net Income in Year 5 (rounded to the nearest dollar)? 6. What is the amount of Cash Flows Net in Year 5 (rounded to the nearest dollar)? 7. What is the NPV of the project (rounded to the nearest dollar)? 8. What is the IRR of the project? After graduating with a marketing degree, you follow in the path of many before you and start your career as a barista. Congrats! After one week you quickly quit and decide to start your own small business plowing snow. You will need to buy a used Ford F350 truck at a local Ford dealer for $47,000. The truck should last for 10 years and will be depreciated to $5,000. Going rates for snow plowing residential driveways in Niles, IL is $30 per snowfall. Snow is expected to fall in the area 20 times per winter. You estimate you can plow the following number of driveways: Year 1 = 250; Year 2 = 275; Year 3 = 275; Year 4 = 325; Year 5 = 350 Your cost of goods as a percent of revenues is estimated constantly at 59%. Your S,G,&A as a percent of revenues is estimated at 33%. The corporate tax rate applicable to your company is 25%. Assume an opportunity cost of capital of 10%. 1. What is the amount of revenues in Year 1 (rounded to the nearest dollar). 2. What is the amount of Gross Profit in Year 2 (rounded to the nearest dollar)? 3. What is the amount of Sales, General, and Administrative Expense in Year 3 (rounded to the nearest dollar)? 4. What is the amount of Depreciation Expense in Year 4 (rounded to the nearest dollar)? 5. What is the amount of Net Income in Year 5 (rounded to the nearest dollar)? 6. What is the amount of Cash Flows Net in Year 5 (rounded to the nearest dollar)? 7. What is the NPV of the project (rounded to the nearest dollar)? 8. What is the IRR of the project
