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MLM Corporation, has provided you the following business operations data: Items Value Equipment cost $8,750 Salvage value, equipment, Year 4 $750 Opportunity cost $0 Externalities

MLM Corporation, has provided you the following business operations data:

Items Value
Equipment cost $8,750
Salvage value, equipment, Year 4 $750
Opportunity cost $0
Externalities (cannibalization) $0
Units sold, Year 1 12,000
Annual change in units sold, after Year 1 13%
Sales price per unit, Year 1 $1.65
Annual change in sales price, after Year 1 3%
Variable cost per unit (VC), Year 1 $1.07
Annual change in VC, after Year 1 3%
Nonvariable cost (Non-VC), Year 1 $2,120
Annual change in Non-VC, after Year 1 2.50%
Project cost of capital (r) 12%
Tax rate 21%
Working capital as % of next year's sales 15%

Moreover, they have tabulated cash flows and performance measures as shown below:

Years

0

1

2

3

4

Unit sales

12,000

13,560

15,323

17,315

Sales price per unit

$1.65

$1.70

$1.75

$1.80

Variable cost per unit (excl. depr.)

$1.07

$1.10

$1.12

$1.15

Nonvariable costs (excl. depr.)

$2,120

$2,173

$2,227

$2,283

Sales revenues = Units Price/unit

$19,800

$23,045

$26,822

$31,219

NOWCt = 15%(Revenuest+1)

$2,970

$3,457

$4,023

$4,683

$0

Basis for depreciation

$8,750

Annual depreciation rate (MACRS)

33.33%

44.45%

14.81%

7.41%

Annual depreciation expense

$2,916

$3,889

$1,296

$648

Remaining undepreciated value

$5,834

$1,944

$648

$0

As a corporate finance advisor, youre required to perform the following tasks:

1- Provide a cash flow forecast for the next four years.

2. Calculate NPV, IRR, MIRR, Profitability Index (PI), Payback, and Discounted Payback.

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