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Given the following set of assumptions, complete the valuation analysis below. Year 0 Year 1 Year 2 Year 3 Year 4 Units of Products Sold

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Given the following set of assumptions, complete the valuation analysis below. Year 0 Year 1 Year 2 Year 3 Year 4 Units of Products Sold 6,500 Growth in Units 30.0% 20.0% -10.0% Selling Price $ 30.00 $ 32.00 $ 32.00 $ 25.00 Cost of Goods Sold (% Sales) 62.0% 60.0% 60.0% 58.0% Marketing Expense (% Sales) 30.0% 20.0% 20.0% 15.0% Administrative Expense $ 250 $ 200 $ 175 $ 150 Working Capital Investment $ (200) $ (150) $ (100) Capital Equipment Investment $ (8,000) Salvage Value $ (400) Tax Rate 40.0% WACC 14.0% Assume: (1) straight-line depreciation to zero and (2) any taxable losses can be immediately used to offset taxable income somewhere else in the company. Complete the capital project evaluation using the following worksheet and answer the questions. Complete the capital project evaluation using the following worksheet and answer the questions. Year 0 Year 1 Year 2 Year 3 Year 4 Sales Cost of Goods Sold Marketing Expense Administrative Expense Depreciation Pre-tax Inc Taxes After Tax Operating Income After Tax Operating Income Depreciation Working Capital Investment Capital Equipment Investment After Tax Salvage Value Cash Flow Net Present Value Internal Rate of Return

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