Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

QUESTION 22 Based on the information in Part III, what is the NPV of this facemask project for BearKat Enterprises? A $2,513.88 B. 53,650.77 C.

image text in transcribed
image text in transcribed
QUESTION 22 Based on the information in Part III, what is the NPV of this facemask project for BearKat Enterprises? A $2,513.88 B. 53,650.77 C. -$3,266.88 D..$5,095.26 then will have positive cash Bows over the next four years of Yeur $45.000 Year 25125.000 Year 3: $160,000 Year 4: $175,000 Regardless of your answer in the previous question we WACC of 7.2%. This is NOT the answer you should have gotten in part 1) Part II Cash Flow Estimation Use this information to answer questions 18 - 25 Bearkat Enterprises is considering a project where they will make high end designer face masks They can buy the equipment they need to make the face masks for $250.000 plus another $20,000 for training and installation. They will have to increase inventory by 517,000 and accounts payable will increase $3,000. They think they can sell 23,000 masks a year at a price of $6.50 each for 4 years. The estimate variable costs at 52% of revenue. They follow a four years MACRS schedule for depreciation with the following depreciation rates Year 1.33% Year 2: 45% Year 3: 15% Year 4: 7% They believe the equipment has a salvage value of $45,000. Bearkat Enterprises has a tax rate of 21%. And a WACC of 7.1%. Once the project is done the additional inventory will not need to be purchased and the accounts payable balance will be paid. Part IV Sensitivity Analysis Use this information to answer questions 26-30. Bearkat Enterprises has a WACC of 7.1% BearKat Enterprises wants you to do a sensitivity analysis where you increase the mask price by 10% and decrease it by 10%. Also see what happens when you increase the variable costs by 10% and decrease them by 10% Part VA Scenario Analysis Use this information to answer questions 31- 34. Suppose Bearkat Enterprises management team decides to do a scenario analysis. They want deuition and costficient of variation for a new

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Day Trading Strategies And Risk Management

Authors: Richard N. Williams

1st Edition

979-8863610528

More Books

Students also viewed these Finance questions