Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The answer must be provided in excel sheets Financial Management MGMT8500 Case study on NPV Weight: 5% of your final grade Tech Help Inc. has
The answer must be provided in excel sheets
Financial Management MGMT8500 Case study on NPV Weight: 5% of your final grade Tech Help Inc. has been offered a new contract. The firm needs to determine whether the contract will be profitable. The new contract will generate 800 billing hours at $125 per year for 5 years. The variable costs, labour will be $32 an hour (including fringe benefits). The fixed costs include 3 vehicle for the employees to service customers at their locations will be $500 per month per car. Other fixed costs will remain the same for the company as a whole but will be allocated to this project at $1,500 for the receptionist and office supplies per month. The company tax rate is 28%. If Tech Help goes ahead with this project, it will lose 2,000 in net income per month. Calculate the NPV using a discount rate of 10% in the excel document titled "Case 2-Week 12-13 Response template". Show the yearly incremental cash flows for this project and then calculate the NPV by discounting the net yearly cash flows. Advise your firm whether it should accept or reject this contract. Required VAN List all relevant costs. Calculate the incremental cash inflows (the revenue the project will generate) Calculate the total yearly costs. Calculate the yearly incremental cash flows. Calculate the NPV of the project. Accept or reject the project. Marks 15 Topic Relevant costs Incremental cash inflows (the revenue the project will generate) Total yearly costs Yearly incremental cash flows NPV of the project Decision SU File Home Insert Page Layout Formulas Data Review View Help ACROBAT Tell me what you want to do . Calibri B IU. V 11 VAA L. A. === E 26 Wrap Text Merge & Center - Paste O General $ % , Number 8.00 Conditional Format as Formatting Table St Styles Clipboard Font Alignment A2 . X V for A Cost item Amount Changing (Y/N) Relevant Cost (Y/N) Category (Variable/ Fixed / Opportunity) Cover Sheet Marking Key 1. Relevant Cost Calculation Paste BIU-- Insert Delete Format A 9 M erge & Center - $ . % - 09.9 Conditional Format as Cell Formatting Table Styles Styles Sort & Find & Filter - Select Editing Font Alignment Number Clipboard (13 . x fx 1 Marking Key Si no Data Section: Cash Inflow parameters >> hours Cash Outflow parameters>>> Revenue/hr Fixed cost /month/car Months/yr Opportunity # of cars Project parameters Tax rate Disc rate Contract period (yrs) Cash inflows Total yearly cost Variable costs Fixed costs Total cost Cover Sheet Marking Key 1. Relevant Cost Calculation HP BU - o u Merge & Lentur Alignment * Formatting Styles Table Styles Font Number Calls Editing Clipboard C17 .T X for 1 Marking Key si no Gross Income Less: Taxes Net Income Opportunity cost Yearly Incremental Cash Year Yearly incremental cashflow NPV Decision Cover Sheet Marking Key 1. Relevant Cost CalculationStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started