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Calculate the IRR, WACC, MCC, and average rate of return. General Electric Estimated Cash Flows Year 1 2 3 4 5 Expected Sales $ 850,000
Calculate the IRR, WACC, MCC, and average rate of return. | |||||
General Electric | |||||
Estimated Cash Flows | |||||
Year | |||||
1 | 2 | 3 | 4 | 5 | |
Expected Sales | $ 850,000 | $ 850,000 | $ 850,000 | $ 850,000 | $ 850,000 |
Direct Cost = 45% | $ (467,500) | $ (467,500) | $ (467,500) | $(467,500) | $(467,500) |
Indirect Cost | $ (50,000) | $ (50,000) | $ (50,000) | $ (50,000) | $ (50,000) |
Depreciation | $ (85,000) | $ (85,000) | $ (85,000) | $ (85,000) | $ (85,000) |
Profit Before Tax | $ 247,500 | $ 247,500 | $ 247,500 | $ 247,500 | $ 247,500 |
Less Tax = 35% | $ (86,625) | $ (86,625) | $ (86,625) | $ (86,625) | $ (86,625) |
Profit After Tax | $ 160,875 | $ 160,875 | $ 160,875 | $ 160,875 | $ 160,875 |
Add: Depreciation | $ 85,000 | $ 85,000 | $ 85,000 | $ 85,000 | $ 85,000 |
Net Cash Flow | $ 245,875 | $ 245,875 | $ 245,875 | $ 245,875 | $ 245,875 |
Server Total (straight line depreciation over 5 years): $425,000.00
Discount 15%
The company is expected to make $850,000.00 each year. Direct costs will be 45% of their expected sales and tax will be 35%.
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