Question
Forcefully Delicious Cookies has decided to offer Moms SUPER special Cookies. I could just sell the recipe itself for $5k. FDC thinks that the new
Forcefully Delicious Cookies has decided to offer Moms SUPER special Cookies. I could just sell the recipe itself for $5k. FDC thinks that the new cookie will generate $200,000 in incremental sales per year in year 1, and sales will increase 10% a year. Fixed costs will be $15,000 per year, and variable costs will be approximately 30% of sales. The additional capital investment in the kitchen equipment (that will be capitalized) needed to produce the new cookies will cost $200,000 and will be depreciated in a straight-line manner for the 4 years of the cookies life assume no salvage value.
-INVENTORY in Year 0 is $30k, in Year 1 inventory value is $40k, in Year 2 the value of inventory remains constant at $40k, in Year 3 inventory is $20k, and finally in Year 4 you have no inventory remailing
-ACCOUNTS RECEIEVABLE Year 1 value of AR is $5k, Year 2 AR value is $10K, Year 3 AR value is 5k, and year 4 AR is 0.
-ACCOUNTS PAYABLE- Year zero value is $2.5k, year 1 value is $2k, Year 2-4 value is zero
Please lay out the cash flows for every relevant year in detail (cash flow from investing, cash flow from changes in net working capital, cash flow from operations)
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