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PLEASE JUST FILL IN THE TABLE After spending $ 1 0 , 8 0 0 on client - development, you have just been offered a
PLEASE JUST FILL IN THE TABLE
After spending $ on clientdevelopment, you have just been offered a big production contract by a new client. The contract will add $ to your revenues for each of the next years and it will cost you $ per year to make the additional product. You will have to use some existing equipment and buy new equipment as well. The existing equipment is fully depreciated, but could be sold for $ now. If you use it in the project, it will be worthless at the end of the project. You will buy new equipment valued at $ and use the year MACRS schedule to depreciate it It will be worthless at the end of the project. Your current production manager earns $ per year. Since she is busy with ongoing projects, you are planning to hire an assistant at $ per year to help with the expansion. You will have to immediately increase your inventory from $ to $ It will return to $ at the end of the project. Your company's tax rate is and your discount rate is What is the NPV of the contract? Note: Assume that the equipment is put into use in year
Calculate the free cash flows below for years through : Round to the nearest dollar.
Calculate the free cash flows below for years through : Round to the nearest dollar.
Year
Year
Year
Year
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