Question
Southern Industrials is analyzing a project with a projected annual sales of $189,400 and costs of $102,300 and requiring an investment of $15,000 in inventory,
Southern Industrials is analyzing a project with a projected annual sales of $189,400 and costs of $102,300 and requiring an investment of $15,000 in inventory, $28,000 in receivables and $#6,000 in payables(use NWC) . Fixed assets are $80,000 and belong to a 30% CCA class. Interest is $11,000 annually. Project life is 3 years and at the end, the equipment is expected to have a market value of $26,000. Cost of the capital is 14% and tax rate is 34%. Using the Grid overleaf as a guide, complete the Pro-Forma income statement and calculate the NPV to determine if this project should go ahead. Asset pool will not be continuing.
| Year | 0 | 1 | 2 | 3 |
| Beginning UCC | $80,000 | |||
| CCA | ||||
| Ending UCC | ||||
| Sales | $189,400.00 | |||
| Costs | $102,300.00 | |||
| Interest | $11,000.OO | |||
| Depreciation | ||||
| EBIT | ||||
| Tax | ||||
| Net Income | ||||
| NPV |
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