Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Margarite's Enterprises is considering a new project. The project will require 325,000 for new non-current assets, 160,000 for additional Inventory and 35,000 for additional trade

image text in transcribed
Margarite's Enterprises is considering a new project. The project will require 325,000 for new non-current assets, 160,000 for additional Inventory and 35,000 for additional trade receivables. Short-term debt is expected to increase by 100,000 and long-term debt is expected to increase by 300,000. The project has a 5-year life. The non-current assets will be depreciated straight-line to a zero book value over the life of the project. At the end of the project, the non-current assets can be sold for 25% of their original cost. The net working capital returns to its original level at the end of the project. The project is expected to generate annual sales of 554,000 and costs of 430,000. The tax rate is 35% and the required rate of return is 15%. What is the amount of the after-tax cash flow from the sale of the non-current assets at the end of this project? (Round your answer to whole euros.)

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

Personal Finance

Authors: Jack Kapoor

6th Edition

0072350849, 9780072350845

More Books

Students also viewed these Finance questions