PUT INSWER THE FIVE QUESTION USING THE MS EXCEL TEMPLATE BELOW

3 ALLIED FOOD PRODUCTS 111-12 Capital Budgeting and Cash Flow Estimation after Seting Supple's success with noncola soft drinks and leam of Cakes and Pepsis interest, Allied Food Products has decided to consider an expansion of its own in the fruit juice Stisiness. The product being considered is fresh lemon juice. Acure that you were recently hired as assistant to the di- error of capital budgeting, and you must evaluate the new Project The lemon juice would be produced in an unused build Gadjacent to Allied Fort Myers plant: Allied owns the Sliding, which is fully depreciated. The required equip crat would cost $200,000, plus an additional $42.000-for shipping and institch. In addition, inventories would rise 6 $25.000, while accounts payable would go up by 5,000. All of these costs would be incurred at t = 0. By a special ling, the machinery could be depreciated under the AFACRS system as 3-year property. The applicable depreci on rates art 33%, 45%, 15%, and 7% The project is expected to operate for 4 years, at which Sie i will be terminated. The cash inflows are assumed to keyin 1 year after the project is undertaken, orar 1, and to Sortime-out to t = 4. At the end of the projects life at = 4. e equipment is expected to have a salvage value of $25,000 Unit sales are expected to total 100,000 cans per year, and es expected sales price is $2.00 per cani Cash operating costs er the project (total operating costs less depreciation) arc espected to total 60 percent of dollar sales. Allied's tax rate is percent, and its weighted average cost of capital is 10 per cint. Tentatively, the lemon juice project is assured to be of gal risk to Allied's other assets. You have been asked to evaluate the projects and to make recommendation as to whether it should be accepted.oe re restel. To guide you in your analysis, your boss gave you the Following set of questions. SE Draw a time line that shows when the net cash inflows and outflows will occat, and explain how the titife line an be used to help structure the analysis. Allied has a standard form that is used in the capital budget- ing process, see Table ICI-1. Port of the table has been completed, but you must replace the blanks with the miss ing numbers. Complete the table in the following steps (1) Fill in the blanks under Year for the initial invest- ment outlay. (2) Complete the table for unit sales, sales price, total revenues, and operating costs excluding depreciation. (3) Complete the depreciation data. (4) Now complete the table down to operating inconic after taxes, and then down to net cash flows (5) Now fill in the banks under Year 4 for the terminal cash flows, and complete the nei cash flow line. Dis. cuss net operating working capital. What would have happctied if the machinery were sold for less than its book value? : ALLIED FOOD PRODUCTS CASE 0 1 2 3 4 Equipment cost Shipping and installation Total Equipment cost Increase in NWC Unit sales Price Revenues Cash opex Depreciation Operating Income before tax Taxes Salvage Value of equipment Net income after tax Add back depreciation Cash Flows NPV IRR 3 ALLIED FOOD PRODUCTS 111-12 Capital Budgeting and Cash Flow Estimation after Seting Supple's success with noncola soft drinks and leam of Cakes and Pepsis interest, Allied Food Products has decided to consider an expansion of its own in the fruit juice Stisiness. The product being considered is fresh lemon juice. Acure that you were recently hired as assistant to the di- error of capital budgeting, and you must evaluate the new Project The lemon juice would be produced in an unused build Gadjacent to Allied Fort Myers plant: Allied owns the Sliding, which is fully depreciated. The required equip crat would cost $200,000, plus an additional $42.000-for shipping and institch. In addition, inventories would rise 6 $25.000, while accounts payable would go up by 5,000. All of these costs would be incurred at t = 0. By a special ling, the machinery could be depreciated under the AFACRS system as 3-year property. The applicable depreci on rates art 33%, 45%, 15%, and 7% The project is expected to operate for 4 years, at which Sie i will be terminated. The cash inflows are assumed to keyin 1 year after the project is undertaken, orar 1, and to Sortime-out to t = 4. At the end of the projects life at = 4. e equipment is expected to have a salvage value of $25,000 Unit sales are expected to total 100,000 cans per year, and es expected sales price is $2.00 per cani Cash operating costs er the project (total operating costs less depreciation) arc espected to total 60 percent of dollar sales. Allied's tax rate is percent, and its weighted average cost of capital is 10 per cint. Tentatively, the lemon juice project is assured to be of gal risk to Allied's other assets. You have been asked to evaluate the projects and to make recommendation as to whether it should be accepted.oe re restel. To guide you in your analysis, your boss gave you the Following set of questions. SE Draw a time line that shows when the net cash inflows and outflows will occat, and explain how the titife line an be used to help structure the analysis. Allied has a standard form that is used in the capital budget- ing process, see Table ICI-1. Port of the table has been completed, but you must replace the blanks with the miss ing numbers. Complete the table in the following steps (1) Fill in the blanks under Year for the initial invest- ment outlay. (2) Complete the table for unit sales, sales price, total revenues, and operating costs excluding depreciation. (3) Complete the depreciation data. (4) Now complete the table down to operating inconic after taxes, and then down to net cash flows (5) Now fill in the banks under Year 4 for the terminal cash flows, and complete the nei cash flow line. Dis. cuss net operating working capital. What would have happctied if the machinery were sold for less than its book value? : ALLIED FOOD PRODUCTS CASE 0 1 2 3 4 Equipment cost Shipping and installation Total Equipment cost Increase in NWC Unit sales Price Revenues Cash opex Depreciation Operating Income before tax Taxes Salvage Value of equipment Net income after tax Add back depreciation Cash Flows NPV IRR