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Smith is determining the viability of a new product line. The new product will require a $ 4 6 0 , 0 0 0 piece
Smith is determining the viability of a new product line. The new product will require a $ piece of equipment. Shipping and installation will cost $ The equipment has a year tax life, and the allowed depreciation for such property are and for Years through Inventory will increase by $ account payable increasing by $ and account receivables increasing by $ The product line is expected to generate annual revenue sales of $ per year, with cost of goods sold being $ per year and other costs excluding depreciation of $ per year. The tax rate is percent, annual interest expense is $ per year, and the required return for this project is percent. a Find CAPEX in year b Find depreciation for years and c Find year EBIT. d Find the year cash flow, FCF e Find net proceeds and terminal cash flow if equipment is sold in year for $
Smith is determining the viability of a new product line. The new product will require a $ piece of equipment. Shipping and installation will cost $ The equipment has a year tax life, and the allowed depreciation for such property are and for Years through Inventory will increase by $ account payable increasing by $ and account receivables increasing by $ The product line is expected to generate annual revenue sales of $ per year, with cost of goods sold being $ per year and other costs excluding depreciation of $ per year. The tax rate is percent, annual interest expense is $ per year, and the required return for this project is percent.
a Find CAPEX in year
b Find depreciation for years and
c Find year EBIT.
d Find the year cash flow, FCF
e Find net proceeds and terminal cash flow if equipment is sold in year for $
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