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Excel spreadsheet is preferred. Need details, thank you! FX, Inc. is a volume manufacturer of high technology automotive mirrors (including cell link and voice activation).
Excel spreadsheet is preferred. Need details, thank you!
FX, Inc. is a volume manufacturer of high technology automotive mirrors (including cell link and voice activation). FX is looking to expand its operations to add a second product. The equipment investment cost for this new operation is $125,000. The project falls under a 7-year MACRS class life and the company estimates that the salvage value will be $50,000 at the end of the 5-year project. The annual revenue for the new line is $100,000. The annual manufacturing costs are listed below: Labor: $20,000 Materials: $12,000 Maintenance: $8,000 Questions: 1. If this project only requires operating and investing activities, determine the project cash flows and find the NPV. The income tax rate is 40% and the MARR is 15%. 2. If the investment can be expensed in the first year, how would this change the NPV? 3. (Assume the 7-Year MACRS class life for all parts below). If the company borrowed $125,000 from the bank at a yearly interest rate of 10% for 6 years. Determine the cash flow and find the NPV. The income tax rate is 40% and the MARR is 15%. 4. From the initial problem, find the interest rate when the company will give up the option to borrow fund. 5. If the annual revenue for the new line is defined over a range of $90,000 to $125,000 and is uniformly distributed, provide an output histogram of the NPV value (use 250 iterations). 6. Assume that the distribution is a triangular distribution instead, recalculate the NPVStep by Step Solution
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