Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Given is the following information for EA GAMES and a new Project called HeavenGames. NEW PROJECT HeavenGames The initial investment in a new plant will

Given is the following information for EA GAMES and a new Project called HeavenGames.

NEW PROJECT HeavenGames

The initial investment in a new plant will cost $1 million to build and these costs will be depreciated straight line to 0 at the end of the project, year 3, and the plant will be sold for $250,000.

It currently already owns the land where EA GAMES want to build the new plant, and it is currently valued at $250,000. The original price that the land was bought for equaled $150,000, 5 years ago, and the land can be sold for $300,000 at the end of the project.

The company expects to sell 50,000 items at a price of $59. The fixed costs are $110,000 and the variable cost per unit is $19.

The investment in NWC at the start of the project amounts to $50,000 and will be recouped at the end of the project. The tax rate is 35%.

What is the project cash flow for Year 0?

What is the annual operating cash flow from this project?

What is the After Tax Salvage Value of the manufacturing plant?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

Step: 3

blur-text-image

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

Money Banking And Financial Markets

Authors: Lloyd B. Thomas

1st International Edition

0070644365, 9780070644366

More Books

Students also viewed these Finance questions