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Please show work Course Project In this assignment, you will undertake calculations in order to evaluate a project, and decide if it should be accepted
Please show work
Course Project In this assignment, you will undertake calculations in order to evaluate a project, and decide if it should be accepted or rejected. Texas Roks, Inc. is considering a new quarry machine. The costs and revenues associated with the machine have been provided to you for analysis: $4,000,000 Cost of the new project Installation costs $100,000 Estimated unit sales in year 1 50,000 Estimated unit sales in year 2 75,000 Estimated unit sales in year 3 40,000 Estimated sales price in year 1 $150 Estimated sales price in year 2 $175 Estimated sales price in year 3 $160 Variable cost per unit $120 Annual fixed cost $50,000 Additional working capital needed $435,000 Depreciation method 3 years straight-line method, no salvage value Texas Rok's tax rate 40% Texas Rok's cost of capital 13% Tasks: Calculate operating cash flow and the change in net working capital. Determine the NPV and IRR of the project. Should the company accept or reject the project based on the NPV or IRR? Why? What is your final accept or reject decision? Why? What is the payback period for this project? Would this influence your decision to accept or rejectStep by Step Solution
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