Homework: Homework 10 Save Score: 0 of 10 pts 5 of 20 (4 complete) HW Score: 19%, 19 of 100 F Problem 11-7 (similar to) Question Help production would be $160,000In addition, there would be an initial expenditure of $800,000 associated with the purchase of new production equipment. It is assumed that this initial expenditure will be depreciated using the simplified straight-line method down to zero over 10 years. Because of the number of stores that will need inventory, the working capital requirements are the same regardless of the level of sales. This project will require a one-time initial investment of $30,000 in net working capital, and that working-capital investment will be recovered when the project is shut down. Finally, assume that the firm's marginal tax rate is 34 percent. a. What is the initial outlay associated with the project? b. What are the annual free cash flows associated with the project for years 1 through 9 under each sales forecast? What are the expected annual free cash flows for years 1 through 97 c. What is the terminal cash flow in year 10 (that is, what is the free cash flow in year 10 plus any additional cash flows associated with the termination of the project)? d. Using the expected free cash flows, what is the project's NPV given a required rate of return of 12 percent? What would the project's NPV be if 10,000 skateboards were sold? b. If your sales forecast is 10,000 skateboards per year, what are the annual free cash flows associated with this project for years 1 through 9 (note that the cash flows for years 1 through 9 are equal)? $ 581600 (Round to the nearest dollar) If your sales forecast is 1,000 skateboards per year, what are the annual free cash flows associated with this project for years 1 through 9 (note that the cash flows for years 1 through 9 are equal)? $ - 12400 (Round to the nearest dollar) If your sales forecast is 18 000 skateboards per year, what are the annual free cash flows associated with this project for years 1 through 9 (note that the cash flows for years 1 through 9 are equal)? $ 1109600 (Round to the nearest dollar.) What are the expected annual free cash flows for years 1 through 9 (note that the cash flows for years 1 through 9 are equal)? (Round to the nearest dollar.) S Enter your answer in the answer box and then click Check Answer Homework: Homework 10 Save Score: 3.64 of 10 pts 5 of 20 (5 completo) HW Score: 22.64%, 22 64 of 100 pl Problem 11-7 (similar to) Question Help 0 (Calculating tree cash flows) At present, Solartech Skateboards is considening expanding its product line to include ga powered skateboards, however, it is questionable how well they will be received by skateboarders. Although you feel there is a 50 percent chance you will sell 10,000 of these per year for 10 years after which time this project is expected to shut down because solar-powered skateboards will become more popular you also recognize that there is a 25 percent chance that you will only sell 1,000 and also a 25 percent chance you will se 18.000 The gas skiteboards would sell for $130 each and have a vanable cost of 5.30 each Regardless of how many you sell the manual fixed costs associated with production would be $160,000 In addition, there would be an intial expenditure of $300,000 associated with the purchase of new production equipment. It is assumed that this intal expenditure will be depreciated using the simplified straight line method down to zero over 10 years Because of the number of stores that will need inventory, the worlong capital requirements are the same regardless of the level of sales. This project will requre a one-time initial investment of $30.000 in net wording capital, and that wortung capital investment will be recovered when the project is shut down. Finally, assume that the firm's marginal tax rate is 34 percent 2. What is the initial outlay associated with the project? b. What are the annual tree cash flows associated with the project for years through ander each sales forecast? What are the expected annual free cash flows for years through 9 c. What is the teminat cash flow in year 10 (that is what is the free cash flow in yew 10 plus any additional shows associated with the nation of the project d. Uning the expected from cash flows, what is the project's NPV given a required rate of return of 12 percorso What would the project's NPV belf 10,000 skateboards were sold? 5.330000 Round to the nearest dollar) b. If your site forecast is 10.000 skateboards per year, what are the annual tree cash flows associated with this project for years tough from that the cash flow for years through equal 100 Round to the nearest dollar) at your sales forecast is 1.000 ateboards per year, what we the art tre cath town associated with this project for years through note that the cash now for years through are equal 1700 (Round to the nearest Gour) your sales tocant is 16,000 keboards per yene, what are the art free cash flow associated with this project for years tovho note that the cash flows for years 1 through are que 51105800 found to the rear doo What are the expected at tre conth tows for yours through a (note that the carth homes for years 1 woons are equay Round to the nearest dobar Enter your answer in the box and then click Check Answe