Question
Swindler Ltd has completed a feasibility study costing $24,950 to determine if there is any benefit in purchasing a new asset.The machine will cost $330,721
Swindler Ltd has completed a feasibility study costing $24,950 to determine if there is any benefit in purchasing a new asset.The machine will cost $330,721 and an additional $16,458 will need to spent to have the machine in operational state.Before the machine can be used staff must be trained at a further cost of $7,342.
The project is expected to last for 5 years and the Taxation Office has confirmed this.At the end of the project the machine will be fully depreciated.
Initial advertising costs are expected to $27,514 and additional stock of $6,300 will be needed.Wages will change from $89,900 to $69,054 and Fixed Costs will remain at $61,206.
The new machine is expected to produce sales of $1,525,934 in the first year and will grow by 13% each year of the project.Material costs will be 28% of sales in each year.
You are required to calculate the net cash flow (round to the nearest dollar and DO NOT include $ sign) that would appear in Year 0 of a Capital Budget.
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