New Project Analysis You are STRONGLY ded to use Ercel for this problem if you plan to talk to me about this problem. Sunshine Smoothies Company (SS) manufactures and distributes smoothies. SSC is considering the development of a new line of high-protein energy smoothies. SSCSCFO has collected the following information regarding the proposed project, which is expected to last 3 years. - The project can be operated at the company's Charleston plant, which is currently vacant The project will require that the company spend 53.5 million today (t) to purchase additional equipment. For tax purposes, the equipment will be depreciated on a straight-line bass over 5 years. Thus, the firm's annual depreciation expense is $3,500,000/5 - $700,000. The company plans to use the equipment for all 3 years of the project. Att 3 which is the project's tast year of operation), the equipment is expected to be sold for $1,600,000 before taxes . The project will require an increase in net operating woricing capital of 5730,000 att. The cost of the working capital will be fully recovered at which is the projectes last year of operation) Expected high-protein energy smoothie sales are as follows. Yet Sales $2,000,000 2 7.550,000 3.400,000 The projects annue operating costs (excluding depreciation are expected to be 50% ose - The company's toutes 40 The combatremely profitable solf any losses are incurred from the night in energie project they can be used to pay taxes pro on the compensorer projects that some that if there are any tax credited to this project they can be used in the year they occur The project he WACC - 10.04 Year Sales 1 $2,000,000 2 7,550,000 3,400,000 The project's annual operating costs (excluding depreciation are expected to be 60% of sales. The company's tax rate is 40%. - The company is extremely profitable, so if any losses are incurred from the high protein energy smoothie project they can be used to partially oftsetases paid on the company's other projects. (That is assume that if there are any tax credits related to this project they can be used in the year they occur) . The project has a WACC - 10.04 A What is the initial investment outley do not includes for the machine for capital budgeting purposes that what is the Year project cash flow? Round your answer to the nearest whole number. Do not round your intermediate calculations. You are STRONGLY odvised to use Excel for this problem if you plan to talk to me about this problem Initial Outlay 54 230,000 3. What are the projects annual cash flows during Years 1.2 and 3? Round your answer to the nearest whole number. Do not round your intermediate calculations. You are STRONGLY ested to use Excel for this problem if you plan to talk to me about this problem Year 151.300.000 Year 252.092,000 Year 353.425,000 Wrist is the projects expected NPV IRR and MIRA? Round your answers to decimal places. Do not round your intermediate calculations, NPV 51,252,613 BR 13.15 IRR 19.95
