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calculate for all 6 years and NPV. PLEASE HELP QUICK After spending $10,300 on chient development, you have just been offered a big production contract
calculate for all 6 years and NPV. PLEASE HELP QUICK
After spending $10,300 on chient development, you have just been offered a big production contract by a new client The contract will add $206,000 to your revenues for each of the next five years and it will cost you $98 to make the additional product. You will have to use some existing equipment and buy new equipment as well. The existing equipment is fully depreciated but could be sold for $51.000 now. If you use it in the project, it will be worthless at the end of the project. You will buy new equipment valued at $29 000 and use the 5-year MACRS schedule to depreciate it. It will be worthless at the end of the project. Your current production manager earns $82,000 per year. Since she is busy with ongoing projects, you are planning to hire an assistant at $37.000 per year to help with the expansion. You will have to immediately increase your inventory from $20.000 to $30,000. It will return to $20,000 at the end of the project. Your company's tax rate is 35% and your discount rate is 14.6%. What is the NPV of the contract? Note Assume that the equipment is put into use in year 1 30 Calculate the free cash flows below. (Round to the nearest dollar) 1/1 1:0 Sales Cost of Goods Sold Gross Profit - Annual Cost Depreciation EBIT his erme Tax Enter any number in the edit fields and then continue to the nextStep by Step Solution
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