Following information is for solving the questions in the section below. The management of Smart Bell Ltd. believes it can sell 65,000 smart doorbell devices per year at $85 per piece. They cost $50 to manufacture (variable cost). Fixed production costs run $60,000 per year. The necessary equipment costs $2,250,000 to buy and would be depreciated at a 20 percent CCA rate. The equipment would have a salvage value of $450,000 after the five-year life of the project. There would a Net Working Capital requirement of \$100,000, and this would be recovered at the end of the fifth year. The discount rate is 15 percent, and the tax rate is 35 percent. What would be the value of the initial (i.e. year =0 ) Cash Flow for this project? $1.75 million $2.64 million $2.35 million $1.58 million $3.23 million What would be the operating cash flows during years 1 to 4 for this project? $832,424$2,332,422$1,439,750$1,243,546$1,026,387 Assuming the operating cost flow during years 1 to 4 was $1,500,000 (Note: this is not necessarily the answer for the previous question) What would be the cash flow during the final year of the project? Assume the after-tax value of salvage value is used. $1,992,000$1,950,000$1,875,000$1,730,250$1,892,500 Assuming that OCF is $1,500,000 (this is not necessarily the answer above), the PVCCAT is $450,000 (again this is not necessarily the answer above); the Present Value of the After Tax of Salvage and Net Working Capital are $150,000 and $75,000; and the Present Value of the Equipment and initial Net Working Capital is $2,350,000, respectively. What would be the Net Present Value for this project? $3,349,054$5,164,121$4,348,654$3,353,233$4,434,602 Assume that the minimum required average Operating Cash Flow (i.e. the same value each year) works out to be $450,000, and that the variable costs are $50 per unit, fixed costs are $60,000 per year, and that the annual production is 65,000 . Based on these assumptions, what would be the minimum price (e.g. bid price) that the could charged for these Smart door bells. $70.28 $83.64 $55.23 $61.57 $72.32 Following information is for solving the questions in the section below. The management of Smart Bell Ltd. believes it can sell 65,000 smart doorbell devices per year at $85 per piece. They cost $50 to manufacture (variable cost). Fixed production costs run $60,000 per year. The necessary equipment costs $2,250,000 to buy and would be depreciated at a 20 percent CCA rate. The equipment would have a salvage value of $450,000 after the five-year life of the project. There would a Net Working Capital requirement of \$100,000, and this would be recovered at the end of the fifth year. The discount rate is 15 percent, and the tax rate is 35 percent. What would be the value of the initial (i.e. year =0 ) Cash Flow for this project? $1.75 million $2.64 million $2.35 million $1.58 million $3.23 million What would be the operating cash flows during years 1 to 4 for this project? $832,424$2,332,422$1,439,750$1,243,546$1,026,387 Assuming the operating cost flow during years 1 to 4 was $1,500,000 (Note: this is not necessarily the answer for the previous question) What would be the cash flow during the final year of the project? Assume the after-tax value of salvage value is used. $1,992,000$1,950,000$1,875,000$1,730,250$1,892,500 Assuming that OCF is $1,500,000 (this is not necessarily the answer above), the PVCCAT is $450,000 (again this is not necessarily the answer above); the Present Value of the After Tax of Salvage and Net Working Capital are $150,000 and $75,000; and the Present Value of the Equipment and initial Net Working Capital is $2,350,000, respectively. What would be the Net Present Value for this project? $3,349,054$5,164,121$4,348,654$3,353,233$4,434,602 Assume that the minimum required average Operating Cash Flow (i.e. the same value each year) works out to be $450,000, and that the variable costs are $50 per unit, fixed costs are $60,000 per year, and that the annual production is 65,000 . Based on these assumptions, what would be the minimum price (e.g. bid price) that the could charged for these Smart door bells. $70.28 $83.64 $55.23 $61.57 $72.32
