First part:

units a year at $2 a unit. The cost of making each paci- sell fier would be $0.80, and the tax rate you would face your would be 40%. You also estimate that you will need to maintain an inventory at 25% of revenues for the Vari period of the project and that you can salvage 80% of Fixe this working capital at the termination of the project. Addi a. Estimate the after-tax operating income each year you on this project. tive, b. Estimate the after-tax operating cash flows on this in fiv plant project. line c. Assume that you have already spent $20,000 flows researching the project. Would you show these 10. Assun expenses as part of your accounting income? What invest about your incremental cash flows? loan.ost 6. You are considering a capital budgeting proposal to on 'make "glow-in-the-dark" pacifiers for anxious first- te. time parents. You estimate that the equipment to e- make the pacifiers would cost you $50,000 (which rs, you can depreciate straight line over the lifetime of the he project, which is 10 years) and that you can sell 15,000