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Aluminum Inc. is about to launch a new range of aluminum chairs, priced at $ 1 2 5 per unit. The unit cost of the
Aluminum Inc. is about to launch a new range of aluminum chairs, priced at $ per unit. The unit cost of the stoves is $ The firm expects to sell the chairs over the next years. The venture will require an initial investment in plant and equipment of $ Assume that the investment will be in an asset class with a CCA rate of At the end of years, the project ends; plant and equipment will have a zero salvage value and Aluminum Inc. will continue to have other assets in this asset class. Sales projections for the aluminum chairs are as follows: Year Unit Sales The net working capital requirement including the initial working capital needed in year is expected to be of the following year's sales. The firm's tax rate is and the discount rate is You can write your answers in a piece of paper and scan it type your answers in a word document or solve the question using an excel spreadsheet. Your answers should be attached to this question a What is the investment in net working capital at the beginning of each year over the life of the project? You may use a table to show your calculations marks b What are the operating cashflows excluding CCA in years to You may use a table to show your calculations marks c What is the PVCCATS from the investment? marks d What is the NPV of this project? Should the firm undertake this project or not? You may use a table to show your calculations marks
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