Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please fill out the table given the information and show the calculations Life Period of the Equipment 4 years New equipment cost Equipment ship &

please fill out the table given the information and show the calculations image text in transcribed
image text in transcribed
Life Period of the Equipment 4 years New equipment cost Equipment ship & Install cost Related start up cost Inventory Increase Accounts Payable Increase Equip. salvage value before tax 8) Sales for first year (1) (200,000) 9) Sales Increase per year (35,000) 10) Operating cost (60% of Sales) (5,000) (as a percent of sales In Year 1) 25,000 11) Depreciation (Straight Line)/YR 5,000 12) Marginal Corporate Tax Rate (U) 15,000 13) Cost of Capital (Discount Rate) 200,000 5% (120,000) -60% (60,000) 21% 10% Year Operations: I/S Revenue Operating Cost Depreciation EBIT Taxes Net Income $ $ $ $ 200,000 $ 210,000 $ 220,500 $ (120,000) $ (126,000) $ (132,300) $ (60,000) $ (60,000) $ (60,000) $ 20,000 $ 24,000 $ 28,200 $ 4,200 $ 5,040 $ 5,922 $ 15,800 $ 18,960 $ 22,278 $ 231,525 (138,915) (60.000) 32,610 6,848.10 25,762 Add back Depreciation $ 60,000 $60,000 $ 60,000 $ 60,000 Total Operating Cash Flow $ 75,800 $ 78,960 $ 82,278 $ 85,762 D 35 ESTIMATING Initial Outlay (Cash Flow, CFO, T=0) CFO CF1 CF2 CF3CF4 CFA CF2 F3_ CHA 38 Year 39 Investments: 401) Equipment cost 41 2) Shipping and Install cost 42 3) Start up expenses 43 Total Basis Cost (1+2+3) 44 4) Net Working Capital 45 Increase in CA - Increase in CL 46 Total Initial Outlay 47 $ (200,000) $ (35,000) $ (5,000) $ (240,000) $ (20,000) $ (260,000) 20,000 49 Terminal: 50 1) Change in net WC 51 2) Salvage value (after tax) 52 Total 53 Project Net Cash Flows Salvage Value Before Tax (1-T) XXXXX $ (260.000) $ 75,800 $ 78,960 $ 82,278 $ 85,762 56 NPV = IRR = Payback

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

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

Recommended Textbook for

Investments

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

11th Edition

1259277178, 978-1259277177

More Books

Students also viewed these Finance questions

Question

Do you contact Jack Smith? Why or why not?

Answered: 1 week ago

Question

specify some main features of the worlds labour force;

Answered: 1 week ago

Question

Define Administration?

Answered: 1 week ago