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I really need help with this question 1. The market share of XY Company that would like to invest on a plant worth 6m today
I really need help with this question
1. The market share of XY Company that would like to invest on a plant worth 6m today in the following expected situations. The company uses straight line depreciation and the plant will have no salvage value after 3 years. The company Marketing Department and Production Department have provided the following information presented as table below. Marketing Department Estimates Production Department Estimates Total market size 1,000,000 Unit sales price $250 Market share of XY 20% Unit variable cost $200 Total fixed cost $6m Assume that the company pays an annual corporate tax of 20% on operating profit and the discount rate for similar risk is 10%. A. Calculate the followings. Calculation Result/ Answer 3 4 Required 1 Total quantity XY may sell Total Revenues of XY 2 company Annual depreciation of plant Total variable cost of XY company 5 Total fixed costs Operation profit (pretax profit or taxable profit) 7 Annual tax amount Operating profit (after-tax profit) 9 Net cash flow 6 10 NPV B. Is the project acceptable? Why Step by Step Solution
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