Copy %20 of NPV and cash flows FurniturePlus Ltd is a large homeware retailer with five stores throughout Auckland. it has recently leamt that IKEA is planning to open its first store in New Zealand and this has the executive management team worried. The executives have just returned from a trip to Europe where they visited some IKEA stores to get a betier sense of what they are dealing with. They noticed that many IKEA stores have a hotdog stand which sells cheap hotdogs and seems to attract a lot of customers to the store. The executives want to try something similar in New Zealand. However, knowing that hotdogs are lesa popular in New Zealand, they opt to install pie stalls at their five Auckland stores instead. They want to carry out a net present value (NPV) analysis to decide whether to go ahead with the progect. The following details are available on the proposed project which has a time horzon of three years: - The coet of the executives' trip to Europe was $45,000. - The total capital expenditure related to the pie stands is $825,000 and is payable immediately. - The stand and equipment can be dopreciated on a stralght line basis, resulting in a depreciation expense of \$275,000 per year over years 1 to 3 . - FumiturePlus expects pie sales to generate revenue of $420,000 in year 1,$450,000 in year 2 and $500,000 in year 3. - FurniturePlus estimates that cash costs and expenses directly related to this project will be 60\% of the total revenue generated by pie sales. - In addition to the pie sales mentioned above, FurniturePlus expects that having the pie stands will allow it to retain $250,000 of normal store sales per year that it would otherwise have lost to IKEA. Assume COGS and operating costs are unaffected. - Due to required food ingredients, FumiturePlus expects its inventory to increase by $175,000 in year 0 . This will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analysis of the project because - In addition to the pie sales mentioned above, Furnitureplus expects that having the ple stands will allow it to retain \$250,000 of normal store sales per year that it would otherwise have lost to 1KEA. Assume COGS and operating costs are unaffected. - Due to required food ingredients, FurniturePlus expects its inventory to increase by $175,000 in year 0 . This will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation When carrying out a NPY analysis of the project because (b) Operating working capital will initially and this is trented as the NPV analysis. (c) The $250.000 of retained normal store sales per year should be because they (d) The travel expenses related to the executives' trip to Europe should be the NPV analysis because they (e) The cash fow from operations (CFO) in year 3 is $ Note: Please provide your answer as an integer without commas in the format of x accox ffor example, if the answer is $123,456.00, type in 123456). - Due to required food ingredients, FurniturePlus expects its inventory to increase by $175,000 in year 0. This Will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28\%. Use the information above to answer the questions below. (a) Depreciatiod (b) Operating woifi the NPV analysis. (c) The $250,000 of retained normal store sales per year should be and this is treated as because they (d) The travel expenses related to the executives' trip to Europe should be the NPV analysis because they (e) The cash fiow from operations (CFO) in year 3 is 5 Note: Please provide your answer as an integer without commas in the format of xoccocr (for exampie, if the answer is $123,456.00, type in 123456 ). - Due to required food ingredients, FumiturePlus expects its inventory to increase by $175,000 in year 0 . This will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analysis of the project because ital will initially and this (c) The $250,000 of retained norm because they Select altemative (d) The travel expenses related to the executives' trip to Europe should be the NPV analyals because they (e) The cash flow from operations (CFO) in year 3 is $ Note: Please provide your answer as an integer without commas in the format of xocoocx (for example, if the answer is $123,456.00, type in 123456). operating costs are unaffected. - Due to required food ingredients, FumiturePlus expects its inventory to increase by $175,000 in year 0 . This will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analysis of the project because (b) Operating work the NPY analysis. (c) The $250,000 of retained normal sto because they (d) The travel expenses related to the executives' trip to Europe should be the NPV analysis because they Select alternative (e) The cash flow from operations (CFO) in year 3 is $ Note: Please provide your answar as an integer without commas in the format of xoccocr (for exampie, if the answer is $123,456.00, type in 123456). - In addition to the ple sales mentioned above, FurniturePlus expects that having the pie stands will allow it to retain $250,000 of normal store sales per year that it would otherwise have lost to IKEA. Asaume COGS and operating costs are unaffected. - Due to required food ingredients. FurniturePlus expects its inventory to increase by $175,000 in year 0 . This will be recovered at the end of year 3 and no further effect on operating working capital is expected: - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analynis of the project because (b) Operating working capital will initialy and this is treated as the NPry analysis. (c) The $250,000 of retained normal store sales per year should be Select altema because they Select aitemative (d) The travel expenses related to the executives" trip to Europe should be the NPV analysis because they (e) The cash flow from operations (CFO) in year 3 is $ Nofo: Please provide your answor as an integer without commas in the format of coccocox (for example, if the answer is $123,456.00, fype in 123456). operating costs are unaffected. - Due to required food ingredients, FurniturePlus expects its inventory to increase by $175,000 in year 0 . This will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analysis of the project because (b) Operating working capital will initially and this is treated as the NPV analysis. (c) The $250,000 of retained normal store sales per year should be because they : (d) The travel expenses related to the executives' trip to Europe shouialbe the NPV analysis because they (e) The cash flow from operations (CFO) in year 3 is $ Note: Please provide your answer as an integer without commas in the format of xxocxx (for example, if the answer is $123,456.00, type in 123456 ). will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analysis of the project because (b) Operating working capital will initially and this is treated as the NPV analysis. (c) The $250,000 of retained normal store sales per year should be Select alternative the NPV analywis because the (d) The tran ative the NPV analysia because the, (e) The cash flow from operations (CFO) in year 3 is $ Note: Please provide your answer as an integer without commas in the format of xoccox ffor example, if the answer is $123,456.00, type in 123456). - vue tu required iood ingreaients, Fumiturerius expects its inventory to increase by $175,000 in year 0. This will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analysis of the project because capital will initially and this is treated as (b) Operating working the NPV analysis: (c) The $250,000 of retained normal store sales per year should be the NPV analysis because (d) The travel expenses related to the executives' trip to Europe should br e NPY analysis because the) (e) The cash flow from operations (CFO) in year 3 is $ Note: Please provide your answer as an integer without commas in the format of xxcocox (for examplo, if the answer is $123,456,00, type in 123456). will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analysis of the project because (b) Operating working capital will initially and this is treated as the NPV analysis. (c) The $250,000 of retained normal store sales per year should be because they Select altemative (d) The travel expenses related to the executives' trip to Europe should be the NPY analysis because they (e) The cash Note: Please provide your answer as an integer without commas in the format of xoxxcx (for example, if the answer is $123,456.00, type in 123456). Reset Copy %20 of NPV and cash flows FurniturePlus Ltd is a large homeware retailer with five stores throughout Auckland. it has recently leamt that IKEA is planning to open its first store in New Zealand and this has the executive management team worried. The executives have just returned from a trip to Europe where they visited some IKEA stores to get a betier sense of what they are dealing with. They noticed that many IKEA stores have a hotdog stand which sells cheap hotdogs and seems to attract a lot of customers to the store. The executives want to try something similar in New Zealand. However, knowing that hotdogs are lesa popular in New Zealand, they opt to install pie stalls at their five Auckland stores instead. They want to carry out a net present value (NPV) analysis to decide whether to go ahead with the progect. The following details are available on the proposed project which has a time horzon of three years: - The coet of the executives' trip to Europe was $45,000. - The total capital expenditure related to the pie stands is $825,000 and is payable immediately. - The stand and equipment can be dopreciated on a stralght line basis, resulting in a depreciation expense of \$275,000 per year over years 1 to 3 . - FumiturePlus expects pie sales to generate revenue of $420,000 in year 1,$450,000 in year 2 and $500,000 in year 3. - FurniturePlus estimates that cash costs and expenses directly related to this project will be 60\% of the total revenue generated by pie sales. - In addition to the pie sales mentioned above, FurniturePlus expects that having the pie stands will allow it to retain $250,000 of normal store sales per year that it would otherwise have lost to IKEA. Assume COGS and operating costs are unaffected. - Due to required food ingredients, FumiturePlus expects its inventory to increase by $175,000 in year 0 . This will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analysis of the project because - In addition to the pie sales mentioned above, Furnitureplus expects that having the ple stands will allow it to retain \$250,000 of normal store sales per year that it would otherwise have lost to 1KEA. Assume COGS and operating costs are unaffected. - Due to required food ingredients, FurniturePlus expects its inventory to increase by $175,000 in year 0 . This will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation When carrying out a NPY analysis of the project because (b) Operating working capital will initially and this is trented as the NPV analysis. (c) The $250.000 of retained normal store sales per year should be because they (d) The travel expenses related to the executives' trip to Europe should be the NPV analysis because they (e) The cash fow from operations (CFO) in year 3 is $ Note: Please provide your answer as an integer without commas in the format of x accox ffor example, if the answer is $123,456.00, type in 123456). - Due to required food ingredients, FurniturePlus expects its inventory to increase by $175,000 in year 0. This Will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28\%. Use the information above to answer the questions below. (a) Depreciatiod (b) Operating woifi the NPV analysis. (c) The $250,000 of retained normal store sales per year should be and this is treated as because they (d) The travel expenses related to the executives' trip to Europe should be the NPV analysis because they (e) The cash fiow from operations (CFO) in year 3 is 5 Note: Please provide your answer as an integer without commas in the format of xoccocr (for exampie, if the answer is $123,456.00, type in 123456 ). - Due to required food ingredients, FumiturePlus expects its inventory to increase by $175,000 in year 0 . This will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analysis of the project because ital will initially and this (c) The $250,000 of retained norm because they Select altemative (d) The travel expenses related to the executives' trip to Europe should be the NPV analyals because they (e) The cash flow from operations (CFO) in year 3 is $ Note: Please provide your answer as an integer without commas in the format of xocoocx (for example, if the answer is $123,456.00, type in 123456). operating costs are unaffected. - Due to required food ingredients, FumiturePlus expects its inventory to increase by $175,000 in year 0 . This will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analysis of the project because (b) Operating work the NPY analysis. (c) The $250,000 of retained normal sto because they (d) The travel expenses related to the executives' trip to Europe should be the NPV analysis because they Select alternative (e) The cash flow from operations (CFO) in year 3 is $ Note: Please provide your answar as an integer without commas in the format of xoccocr (for exampie, if the answer is $123,456.00, type in 123456). - In addition to the ple sales mentioned above, FurniturePlus expects that having the pie stands will allow it to retain $250,000 of normal store sales per year that it would otherwise have lost to IKEA. Asaume COGS and operating costs are unaffected. - Due to required food ingredients. FurniturePlus expects its inventory to increase by $175,000 in year 0 . This will be recovered at the end of year 3 and no further effect on operating working capital is expected: - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analynis of the project because (b) Operating working capital will initialy and this is treated as the NPry analysis. (c) The $250,000 of retained normal store sales per year should be Select altema because they Select aitemative (d) The travel expenses related to the executives" trip to Europe should be the NPV analysis because they (e) The cash flow from operations (CFO) in year 3 is $ Nofo: Please provide your answor as an integer without commas in the format of coccocox (for example, if the answer is $123,456.00, fype in 123456). operating costs are unaffected. - Due to required food ingredients, FurniturePlus expects its inventory to increase by $175,000 in year 0 . This will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analysis of the project because (b) Operating working capital will initially and this is treated as the NPV analysis. (c) The $250,000 of retained normal store sales per year should be because they : (d) The travel expenses related to the executives' trip to Europe shouialbe the NPV analysis because they (e) The cash flow from operations (CFO) in year 3 is $ Note: Please provide your answer as an integer without commas in the format of xxocxx (for example, if the answer is $123,456.00, type in 123456 ). will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analysis of the project because (b) Operating working capital will initially and this is treated as the NPV analysis. (c) The $250,000 of retained normal store sales per year should be Select alternative the NPV analywis because the (d) The tran ative the NPV analysia because the, (e) The cash flow from operations (CFO) in year 3 is $ Note: Please provide your answer as an integer without commas in the format of xoccox ffor example, if the answer is $123,456.00, type in 123456). - vue tu required iood ingreaients, Fumiturerius expects its inventory to increase by $175,000 in year 0. This will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analysis of the project because capital will initially and this is treated as (b) Operating working the NPV analysis: (c) The $250,000 of retained normal store sales per year should be the NPV analysis because (d) The travel expenses related to the executives' trip to Europe should br e NPY analysis because the) (e) The cash flow from operations (CFO) in year 3 is $ Note: Please provide your answer as an integer without commas in the format of xxcocox (for examplo, if the answer is $123,456,00, type in 123456). will be recovered at the end of year 3 and no further effect on operating working capital is expected. - The corporate tax rate is 28%. Use the information above to answer the questions below. (a) Depreciation when carrying out a NPV analysis of the project because (b) Operating working capital will initially and this is treated as the NPV analysis. (c) The $250,000 of retained normal store sales per year should be because they Select altemative (d) The travel expenses related to the executives' trip to Europe should be the NPY analysis because they (e) The cash Note: Please provide your answer as an integer without commas in the format of xoxxcx (for example, if the answer is $123,456.00, type in 123456). Reset
