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( Calculating free cash flows ) You are considering new elliptical trainers and you feel you can sell 5 , 0 0 0 of these
Calculating free cash flows You are considering new elliptical trainers and you feel you can sell of these per year for years after which time this project is expected to shut down when it is learned that being fit is unhealthy The elliptical trainers would sell for $ each and have a variable cost of $ each. The annual fixed costs associated with production would be $ In addition, there would be a $ initial expenditure associated with the purchase of new production equipment. It is assumed that this initial expenditure will be depreciated using the bonus depreciation method in year This project will also require a onetime initial investment of $ in net working capital associated with inventory, and workingcapital investment will be recovered when the project is shut down. Finally, assume that the firm's marginal tax rate is percent. a What is the initial outlay associated with this project? b What are the annual free cash flows associated with this project for years and through c What is the terminal cash flow in year that is what is the free cash flow in year plus any additional cash flows associated with the termination of the project d What is the project's NPV given a required rate of return of percent? a What is the initial outlay associated with this project? Round to the nearest dollar. b What is the free cash flows associated with this project for year Round to the nearest dollar. What are the free cash flows associated with this project for years through note that the cash flows for years through are equal S Round to the nearest dollar. c What is the terminal cash flow in year that is what is the free cash flow in year plus any additional cash flows associated with the termination of the project I Round to the nearest dollar. d What is the project's NPV given a required rate of return of percent? $ Round to the nearest dollar.
Calculating free cash flows You are considering new elliptical trainers and you feel you can sell of these per year for years after which time this project is expected to shut down when it is learned that being
fit is unhealthy The elliptical trainers would sell for $ each and have a variable cost of $ each. The annual fixed costs associated with production would be $ In addition, there would be a
$ initial expenditure associated with the purchase of new production equipment. It is assumed that this initial expenditure will be depreciated using the bonus depreciation method in year This project will
also require a onetime initial investment of $ in net working capital associated with inventory, and workingcapital investment will be recovered when the project is shut down. Finally, assume that the firm's
marginal tax rate is percent.
a What is the initial outlay associated with this project?
b What are the annual free cash flows associated with this project for years and through
c What is the terminal cash flow in year that is what is the free cash flow in year plus any additional cash flows associated with the termination of the project
d What is the project's NPV given a required rate of return of percent?
a What is the initial outlay associated with this project?
Round to the nearest dollar.
b What is the free cash flows associated with this project for year
Round to the nearest dollar.
What are the free cash flows associated with this project for years through note that the cash flows for years through are equal
S Round to the nearest dollar.
c What is the terminal cash flow in year that is what is the free cash flow in year plus any additional cash flows associated with the termination of the project
I Round to the nearest dollar.
d What is the project's NPV given a required rate of return of percent?
$
Round to the nearest dollar.
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