Question
I need help with this You want to start a project. For this you know that you will have to buy several equipments. The sum
I need help with this
You want to start a project. For this you know that you will have to buy several equipments. The sum of these is $8,500,000. The depreciation of this equipment will be $500,000 per year. The cost of installing the equipment corresponds to $1,500,000. In turn, you will have to make different purchases to start the business. These amount to the sum of $1,500,000. The interests that you will have to pay annually correspond to 3% of the total of the investment and the requested loan is for 5 years. You expect to earn an income of $4,100,000 in the first year. The costs of sale correspond to 30% of your income. The administrative expenses will be 30% of the gross profit. Taxes are 30%. From the second year, income is expected to increase by 15% each year, while taxes will grow by 1% each year. What is the initial investment? Calculate the flows for the first 5 years.
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