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Can someone please solve (c) (d) and (e) part of the question with hand written solution. Urgent. Cost of new plant and equipment: Shipping and
Can someone please solve (c) (d) and (e) part of the question with hand written solution. Urgent.
Cost of new plant and equipment: Shipping and installation cost: Unit Sales: Year 1 2 $ 9,900,000 $ 100,000 Unit sold 8,000 10,000 15,500 9,500 9,500 3 4 5 Sales price per unit: $350 / unit in years 1 and 2, $300 / unit in year 3,4 and 5 Variable cost per unit: $50 / unit Annual fixed costs: $ 200,000 Working Capital Requirement: There will be an initial working capital requirement of $ 100,000 just to get production started. Then, for each year, the total investment in NWC will be equal to 10% of the dollar value of sales for that year. Finally, 90 percent of the working capital is liquidated at the termination of the project at the end of year 5. The Depretiation Method: We used the simplified straight-line method over 5 years. It is assumed that the plant and equipment will have no salvage value after 5 years. Interest Expenses: There will be an interest payment of $100,000 every year for five years. a) Given the following information, Use Excel Programa and determine the free cash flows associated with the project. b) Use Excel Program and calculate NPV (Net Present Value) and the IRR (Internal Rate of Return) c) According to your NPV and IRR result in section b), as a Financial Manager, do you accept or reject the preoject? Why? d) Use calculator to find the NPV ? Do you accept the project? Explain your result. e) Use Payback Period ? Do you accept the project? Explain your result. Cost of new plant and equipment: Shipping and installation cost: Unit Sales: Year 1 2 $ 9,900,000 $ 100,000 Unit sold 8,000 10,000 15,500 9,500 9,500 3 4 5 Sales price per unit: $350 / unit in years 1 and 2, $300 / unit in year 3,4 and 5 Variable cost per unit: $50 / unit Annual fixed costs: $ 200,000 Working Capital Requirement: There will be an initial working capital requirement of $ 100,000 just to get production started. Then, for each year, the total investment in NWC will be equal to 10% of the dollar value of sales for that year. Finally, 90 percent of the working capital is liquidated at the termination of the project at the end of year 5. The Depretiation Method: We used the simplified straight-line method over 5 years. It is assumed that the plant and equipment will have no salvage value after 5 years. Interest Expenses: There will be an interest payment of $100,000 every year for five years. a) Given the following information, Use Excel Programa and determine the free cash flows associated with the project. b) Use Excel Program and calculate NPV (Net Present Value) and the IRR (Internal Rate of Return) c) According to your NPV and IRR result in section b), as a Financial Manager, do you accept or reject the preoject? Why? d) Use calculator to find the NPV ? Do you accept the project? Explain your result. e) Use Payback Period ? Do you accept the project? Explain your resultStep by Step Solution
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