Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 30,000, with an annual growth rate of 4.00%

image text in transcribedimage text in transcribed

NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 30,000, with an annual growth rate of 4.00% over the next ten years. The sales price per unit will start at $45.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $2,100,000. It will be depreciated using MACRS, 5, and has a seven-year MACRS life classification. Fixed costs will be $350,000 per year. Miglietti Restaurants has a tax rate of 35%. What is the operating cash flow for this project over these ten years? Find the NPV of the project for Miglietti Restaurants if the manufacturing equipment can be sold for $130,000 at the end of the ten-year project and the cost of capital for this project is 9%. What is the operating cash flow for this project in year 1? $ (Round to the nearest dollar.) - Data table MACRS Fixed Annual Expense Percentages by Recovery Class Click on this icon to download the data from this table Year 1 3-Year 33.33% 44.45% 14.81% 7.41% 10-Year 10.00% 18.00% 2 3 5-Year 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% 14.40% 4 7-Year 14.29% 24.49% 17.49% 12.49% 8.93% 8.93% 8.93% 4.45% 5 6 7 8 11.52% 9.22% 7.37% 6.55% 6.55% 6.55% 6.55% 3.28% 9 10 11

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Finance questions