Question
NYX company is about to create new widgets. The project will last for 7 years. The company plans to sell 10,000 widgets in year one,
NYX company is about to create new widgets. The project will last for 7 years. The company plans to sell 10,000 widgets in year one, and the number of widgets will increase by 3% each year. The company will sell the widgets for $10 each, and the cost to produce the widgets will be $4 per unit. Fixed costs are expected to be $40,000. The project will require an initial capital investment of $100,000 which will be depreciated using a 5-year MACRS schedule (See Table 6.3 below). In year 7, the equipment can be salvaged for $10,000. Net Working Capital will be 5% of the next years projected sales. The tax rate is 21% and the Discount rate is 12%.
What is the Operating Cash Flow in each year?
Group of answer choices
0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | |
$ - | $ (8,058.79) | $ 3,517.08 | $ 11,092.09 | $ 12,645.16 | $ 18,795.24 | $ 24,993.34 | ||
0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | |
$ 20,000.00 | $ 23,941.21 | $ 22,717.08 | $ 22,612.09 | $ 24,165.16 | $ 24,555.24 | $ 24,993.34 | ||
0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
$ 20,000.00 | $ 22,519.21 | $ 19,830.42 | $ 18,216.83 | $ 18,216.04 | $ 17,005.65 | $ 15,795.26 | |
0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
$ 18,800.00 | $ 20,221.21 | $ 21,685.08 | $ 23,192.89 | $ 24,745.96 | $ 26,345.64 | $ 27,993.34 |
\begin{tabular}{|c|c|c|c|c|c|c|} \hline \multicolumn{7}{|c|}{ Recovery Period Class } \\ \hline Year & 3 Years & 5 Years & 7 Years & 10 Years & 15 Years & 20 Years \\ \hline 1 & .3333 & .2000 & .1429 & 1000 & .0500 & .03750 \\ \hline 2 & .4445 & .3200 & .2449 & 1800 & .0950 & 07219 \\ \hline 3 & .1481 & 1920 & .1749 & 1440 & .0855 & .06677 \\ \hline 4 & .0741 & .1152 & .1249 & .1152 & .0770 & .06177 \\ \hline 5 & & .1152 & .0893 & .0922 & .0693 & .05713 \\ \hline 6 & & .0576 & .0892 & .0737 & .0623 & .05285 \\ \hline 7 & & & .0893 & .0655 & .0590 & .04888 \\ \hline 8 & & & .0446 & .0655 & .0590 & .04522 \\ \hline 9 & & & & .0656 & .0591 & .04462 \\ \hline 10 & & & & .0655 & .0590 & .04461 \\ \hline 11 & & & & .0328 & .0591 & .04462 \\ \hline 12 & & & & & .0590 & .04461 \\ \hline 13 & & & & & .0591 & .04462 \\ \hline 14 & & & & & .0590 & .04461 \\ \hline 15 & & & & & .0591 & .04462 \\ \hline 16 & & & & & .0295 & .04461 \\ \hline 17 & & & & & & .04462 \\ \hline 18 & & & & & & .04461 \\ \hline 19 & & & & & & .04462 \\ \hline 20 & & & & & & .04461 \\ \hline 21 & & & & & & .02231 \\ \hline \end{tabular}
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