Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Show work in excel please. Boca Corp is considering acquiring a new segment to add to its product line. The estimated sales growth rate is

Show work in excel please. image text in transcribed
Boca Corp is considering acquiring a new segment to add to its product line. The estimated sales growth rate is 6.75% and the Boca forecasts to sell 3000 units of its new product, which is priced at 37.50 per unit. COGS is estimated at 48% of current years sales. The expansion will need an investment of $90,000 in new equipment, which will be depreciated at $25,000/year over three years. Net working capital is estimated to be 20% of sales per year. The firm also builds up initial inventory of 10% of the first year's anticipated COGS before beginning the project The firm's tax rate 30% and the firm's WACC is 10.5%. The equipment will be sold at the end of three years for $10,000. What are project free cash flows per year? What is the terminal value? What is the NPV and IRR for this project? Should you accept it

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

Step: 3

blur-text-image

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

The Infographic Guide To Personal Finance

Authors: Michele Cagan CPA, Elisabeth Lariviere

1st Edition

1507204663, 978-1507204665

More Books

Students also viewed these Finance questions

Question

8. Explain the relationship between communication and context.

Answered: 1 week ago