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please help me with this task (corporate finance) 5) Large XYZ Company that specializes in balls production for different games - football, tennis, golf -

please help me with this task (corporate finance) image text in transcribed
5) Large XYZ Company that specializes in balls production for different games - football, tennis, golf - decided to launch a new project (colored bowling balls production) in 2019. Marketing research (amounted $20,000 ) came up with the conclusion that new product could gain 10-15\% of the market. Marketing agency agreed to payments in installments (two equal payments in two years). ZYX company is a major rival firm which is all-equity financed. It is a mature firm with 3% stable growth. Currently the price of ZYX shares is $103, the last dividend paid was $10. Currently the analysis of production efficiency is carrying out. It is supposed to produce the bowling balls in one of the plant buildings of the firm. This building and land are currently not exploited by the firm and their market value is $150,000 (after tax). Assume the value of the land and building is not going to change within the time. The forecast for the project is the following: - Equipment $90,000; delivery and set-up $20,000; expected market value of equipment 5 years after $30,000; book value 5 years after $10,000; - Quantity of balls produced within 5 years: 5,000;8,000;12,000;10,000; and 6,000 ; - Price of a ball in the first year $20, annual price growth 2%; - Costs of production are also planned to grow but at a rate of 10% a year starting from $10 per ball in year 1 ; - Corporate tax rate is 34%; - For product to be launched and well as for liquidity purposes the cash reserves of $1,500 are necessary today whereas short-term accounts payable of $3,000; inventory of $2,500 and short-termlaccounts receivable of $9,000 should be reserved today also. It is assumed that net working capital will account for 10% of the forecasted revenue. At the end of the project all NWC will be turned into cash; - The company applies straight line depreciation schemes. Calculate NPV of the project. Should we accept the project? Should the company launch the project if the required return for the projects of the same risk level is 5%,10%,15%,20% ? Use NPV criterion. Determine IRR and PI of the project. Comment on your results

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