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Please show any/all calculations and work, Thank you 4) Your company is considering a project that will generate sales revenue of $90 million in Year
Please show any/all calculations and work, Thank you
4) Your company is considering a project that will generate sales revenue of $90 million in Year 1. Revenue is expected to be flat for subsequent years. The project requires working capital equal to 16% of sales revenue, and has total operating costs excluding depreciation equal to 50% of sales. The equipment has a 3 year MACRS life and can be purchased and installed for $ 100 million. The project will end in three years. At that time, the equipment can be sold for $4.2 million. Your company's tax rate is 25%. a) Find the initial cash flow (Yr. 0). b) Find the operating cash flows (Yrs. 1-3). C) Find the after-tax cash flow from the sale of the equipment. D) Find the total flow that occurs in Yr. 3. MACRS Depreciation Tables 3-Year 5-Year 7-Year 10-Year Ownership Year 1 2 3 4 5 6 33.33% 44.44 14.82 7.41 20.00% 32.00 19.20 11.52 11.52 5.76 14.29% 24.49 17.49 12.49 8.93 8.92 8.93 4.46 5 10.00% 18.00 14.40 11.52 9.22 7.37 6.55 6.55 6.55 6.55 3.29 100.0% 7 8 9 10 11 100.0% 100.0% 100.0%Step by Step Solution
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