Question
Project costs $1,800,000 fixed assets $10,000 shipping & installation fee Life of project 8 years Salvage value of fixed assets 10% of the gross fixed
Project costs $1,800,000 fixed assets
$10,000 shipping & installation fee
Life of project 8 years
Salvage value of fixed assets 10% of the gross fixed assets
Working capital needed $35,000, expected increase 2.5% each year
Produce 150,000, expected growth 5% each year
Unit price $7
Cost of each unit is $4.5
Inflation rate 2.5% each year
Adjust unit price and variable cost off the inflation rate.
8-year straight-line depreciation for fixed assets
Tax 21%
Cost of capital 11.5%.
0-8 years
How to determine the initial outlay, annual after-tax cash flows, and terminal cash flow for this project.
How to determinethe payback period, discounted payback period, NPV, PI, IRR, and MIRR.
Determent PV of expected FCF.
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