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pls help! REX Inc. currently has one product, low-priced computers. REX Inc. has decided to sell a new line of medium-priced computers. The plant and
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REX Inc. currently has one product, low-priced computers. REX Inc. has decided to sell a new line of medium-priced computers. The plant and equipment required for producing the new line of computers costs $150 and will be depreciated down to zero over 15 years using straight-line depreciation. It is expected that the plant and equipment can be sold (market or scrap value) for $60 at the end of 7 years. The new computers will also require today an increase in net working capital of $7 that will be returned at the end of the project. Sales for the new line of computers are estimated at $12 a year. Variable costs are 60% of sales. The project is expected to last 7 years. In addition to the production variable costs, the fixed costs each year will be $2. The company has spent $2 in research and a marketing study that determined the company will gain $8 in sales a year of its existing high-priced computers. The production variable cost of the existing high-priced computers is $3 a year. The tax rate is 25 percent and the cost of capital is 10%. DO NOT use parenthesis to denote negative numbers, USE the negative sign and place it in front of first digit of your answer when your answer is a negative number Round to nearest two decimals and enter answer with two decimals including zeros). For example, if the answer you obtained is $40 then enter 40: if the answer you obtained is $40.602 then enter 40.60 1. What is the initial outlay (10) for this project? 2. What is the annual Earnings before Interests, Taxes, and Depreciation (EBIDTA) for this project? 43. What is the net income for this project? A 4. What is the operating cash flow (OCF) for this project? 5. What is the remaining book value for the plant at equipment at the end of the project? 6. What is the tax effect from selling the plant and equipment at the end of the project? 7. What is the termination value for this project Step by Step Solution
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