Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

Operating cash flow (growing each year; MACRS). Mathews Mining Company is looking at a project that has the following forecasted sales: first-year sales are 6,800

image text in transcribed
image text in transcribed
Operating cash flow (growing each year; MACRS). Mathews Mining Company is looking at a project that has the following forecasted sales: first-year sales are 6,800 units, and sales will grow at 15% over the next four years (a five-year project). The price of the product will start at $124 per unit and will increase each year at 5%. The production costs are expected to be 62% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $1,400,000. It will be depreciated using MACRS, D. and has a seven-year MACRS life classification. Fixed costs will be $50,000 per year. Mathews Mining has a tax rate of 30%. What is the operating cash flow for this project over these five years? lear 1 3-Year 33.33% 2 3 4 44.45% 14.81% 7.41% 5-Year 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% 7-Year 14.29% 24.49% 17.49% 12.49% 8.93% 8.93% 8.93% 4.45% 5 6 Solo 00 Olor 10-Year 10.00% 18.00% 14.40% 11.52% 9.22% 7.37% 6.55% 6.55% 6.55% 6.55% 3.28% 7 8 9 10 11

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Quantitative Financial Risk Management

Authors: Constantin Zopounidis, Emilios Galariotis

1st Edition

1118738187, 978-1118738184

More Books

Students explore these related Finance questions