Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Mathews Mining Company is looking at a project that has the following forecasted sales: first-year sales are 7000 units, and sales will grow at 15%

Mathews Mining Company is looking at a project that has the following forecasted sales: first-year sales are 7000 units, and sales will grow at 15% over the next four years (a five-year project). The price of the product will start at $ 124.00 per unit and will increase each year at 7%. The production costs are expected to be 60% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $1,600,000. It will be depreciated using MACRS, and has aseven-year MACRS life classification. Fixed costs will be $51,000 per year. Mathews Mining has a tax rate of 30%. What is the operating cash flow for this project over these five years? What is the operating cash flow for this project in year 1?_____________ Round to nearest dollar What is the operating cash flow for this project in year 2? _____________ Round to nearest dollar What is the operating cash flow for this project in year 3? _____________ Round to nearest dollar What is the operating cash flow for this project in year 4? _____________ Round to nearest dollar What is the operating cash flow for this project in year 5? _____________ Round to nearest dollar What is the book value of the manufacturing equipment after five years? _____________ Round to nearest dollar What is the gain (or loss) for the sales of the manufacturing equipment after 5 years? _____________ Round to nearest dollar What is the after-tax cash flow of the manufacturing equipment at disposal? _____________ Round to nearest dollar What is the NPV of the project? _____________ Round to nearest dollar

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_2

Step: 3

blur-text-image_3

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

High Frequency Financial Econometrics

Authors: Yacine Aït Sahalia, Jean Jacod

1st Edition

0691161437, 978-0691161433

More Books

Students also viewed these Finance questions

Question

Who will be involved?

Answered: 1 week ago

Question

Identify conflict triggers in yourself and others

Answered: 1 week ago