Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Fresh Healthcare Inc. is considering the following project. The project requires an initial investment of $20 million. The corporate tax rate is 21%, and

 

Fresh Healthcare Inc. is considering the following project. The project requires an initial investment of $20 million. The corporate tax rate is 21%, and the firm's required rate of return is 10%. Assume that the firm uses the straight-line depreciation method. Price per unit: $1,550 Variable cost per unit: $750 Annual fixed costs: $520,000 In this question, the sign (+/-) of your answer(s) matters. Duration: 12 years Number of units: 5,000 (per year) a) What is the annual operating cash flow (OCF) of the project? b) What is the net present value (NPV) of the project? c) What is the sensitivity to the change in the variable cost per unit in the NPV?

Step by Step Solution

3.37 Rating (163 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the annual operating cash flow OCF of the project we need to calculate the following components Revenue Number of units Price per unit 50... 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_2

Step: 3

blur-text-image_3

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

Financial statements

Authors: Stephen Barrad

5th Edition

978-007802531, 9780324186383, 032418638X

More Books

Students also viewed these Finance questions

Question

12. Inx - -) dx - (x xlnx)dy = 0

Answered: 1 week ago

Question

dy 2 = y 2x with y(0) = 0 %3D dx

Answered: 1 week ago