Problem 12-13 Project Cash Flows (LG12-3) You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $460 per unit and sales volume to be 1,000 units in year 1;1,250 units in year 2 ; and 1,325 units in year 3. The project has a 3-year life. Variable costs amount to $255 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $183,000 in assets, which can be depreciated using bonus depreciation. The actual market value of these assets at the end of year 3 is expected to be $41,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 21 percent and the required return on the project is 10 percent. (Use SL depreciation table) What will the cash flows for this project be? Note: Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. Veggie Burgers, Inc. would like to maintain its cash account at a minimum level of $252,000 but expects the standard deviation in net daily cash flows to be $12,700, the effective annual rate on marketable securities to be 4.4 percent per year, and the trading cost per sale or purchase of marketable securities to be $31.00 per transaction. What will be its optimal upper cash limit? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.) Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fullydepreciated vans, which you think you can sell for $4,800 a piece and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $47,000 each in the configuration you want them, and can be depreciated using MACRS over a 5-year life, but you are unable to make use of either bonus depreciation or Section 179 expensing. Expected yearly before-tax cash savings due to acquiring the new vans amounts to about $5,500 each. If your cost of capital is 12 percent and your firm faces a 21 percent tax rate, what will the cash flows for this project be? (Round your answers to the nearest dollar amount.) Problem 12-13 Project Cash Flows (LG12-3) You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $480 per unit and sales volume to be 1,000 units in year 1;1,250 units in year 2 ; and 1,325 units in year 3. The project has a 3-year life. Variable costs amount to $265 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $189,000 in assets, which can be depreciated using bonus depreciation. The actual market value of these assets at the end of year 3 is expected to be $43,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 21 percent and the required return on the project is 12 percent. (Use SL depreciation table) What will the cash flows for this project be? Note: Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $50,000. The truck falls into the MACRS 3-year class, is not eligible for either bonus depreciation or Section 179 expensing, and it will be sold after three years for $20,100. Use of the truck will require an increase in NWC (spare parts inventory) of $2,100. The truck will have no effect on revenues, but it is expected to save the firm $17,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 21 percent. What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)