Question
NPV. Miglietti Restaurants is looking at a project with the following forecastedsales: first-year sales quantity of 34 comma 000 34,000, with an annual growth rate
NPV.Miglietti Restaurants is looking at a project with the following forecastedsales: first-year sales quantity of 34 comma 000
34,000, with an annual growth rate of 4.00
4.00% over the next ten years. The sales price per unit will start at $42.00
42.00 and will grow at 2.00 %
2.00% per year. The production costs are expected to be 55
55% of the currentyear's sales price. The manufacturing equipment to aid this project will have a total cost(including installation) of $2 comma 100 comma 000
2,100,000. It will be depreciated usingMACRS, LOADING...
, and has aseven-year MACRS life classification. Fixed costs will be $340 comma 000
340,000 per year. Miglietti Restaurants has a tax rate of 35
35%. What is the operating cash flow for this project over these tenyears? Find the NPV of the project for Miglietti Restaurants if the manufacturing equipment can be sold for $150 comma 000
150,000 at the end of theten-year project and the cost of capital for this project is 7
7%.
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