Question
Assume a project that has an installed cost of $210,000. New sales of 60,000 units each year will occur with a sales price of $4.5
Assume a project that has an installed cost of $210,000. New sales of 60,000 units each year will occur with a sales price of $4.5 per unit, variable costs per unit are $3.00 and fixed costs each year are $32,000. For this problem assume a 3-year life with equal depreciation each year for simplicity, and a $0 terminal value. An increase in NWC of $20,000 will occur in year 0 with a return of the NWC at the end of the project when we sell our inventory, collect on our receivables and pay off our payables. Calculate net income. Calculate the operating cash flow using all 4 methods indicated in chapter 10: Operating cash flow, The bottom up approach, the top down approach, and tax shield approach.TaxRate is 20%. Please use formulas if possible rather than excel. I'm trying to learn how to do this. Thanks.
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