Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $ 7 5

Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $753,800.00 work cell. Further, it will cost the firm $55,400.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $66,500.00. The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $7,200.00. Finally, the firm will invest $11,200.00 in net working capital to ensure the project has sufficient resources to be successful.
The project will generate annual sales of $905,000.00 with expenses estimated at 37.00% of sales. Net working capital will be held constant throughout the project. The tax rate is 37.00%.
The work cell is estimated to have a market value of $473,000.00 at the end of the fourth year. The firm expects to reclaim 86.00% of the final NWC position.
The cost of capital is 13.00%.
What is the terminal cash flow for the project?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Technology And Finance Challenges For Financial Markets Business Strategies And Policy Makers

Authors: Morten Balling, Frank Lierman, Andy Mullineux

1st Edition

041529827X, 978-0415298278

More Books

Students also viewed these Finance questions

Question

1. Does your voice project confidence? Authority?

Answered: 1 week ago