Question
Calculate the stream of CFs for this upgrade project. Required information: -Due to new technology investment, sales are expected to increase on an incremental basis
Calculate the stream of CFs for this upgrade project.
Required information:
-Due to new technology investment, sales are expected to increase on an incremental basis of $10,000 increase every year for the next 4 years.
-All overhead costs (except for the new equipment cost) are estimated on an incremental basis of $1,500 increase every year for the next 4 years.
-Tax rate = 40.00%
-Depreciation of the new technology is estimated on a straight-line method, which is set at $1,000 for the next 4 years.
-Estimated cash flows (CFs) are measured on an after-tax basis.
Estimation of the Flow of Funds (Stream of Expected After-Tax CFs) 4-year Financial Projections and After-tax Pro-Forma CF Structure Sales Projections \begin{tabular}{|c|c|c|c|} \hline \multicolumn{1}{c}{ Year 1} & Year 2 & Year 3 & Year 4 \\ \hline & & & \\ \hline \end{tabular} Overhead Costs: Additional Staffing and Dellivery Cost Shipping, Installation, and Insurance Cost Maintenance Cost Design, Build, and Implementation of the New Technology
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