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The answer should include the relevant formula or equation and the final numbers You must analyze a potential new producta caulking compound that Cory Materials'

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The answer should include the relevant formula or equation and the final numbers

You must analyze a potential new producta caulking compound that Cory Materials' R&D people developed for use in the residential construction industry. Cory's marketing manager thinks the company can sell 115,000 tubes per year for 3 years at a price of $3.25 each, after which the product will be obsolete. The required equipment would cost $150,000, plus another $15,000 for shipping and installation. Current assets (receivables and inventories) would increase by $35,000, while current liabilities (accounts payable and accruals) would rise by $15,000. Variable costs would be 60% of sales revenues, fixed costs (exclusive of depreciation) would be $70,000 per year, and fixed assets would be depreciated using the straight line method. When production ceases after 3 years, the equipment is expected to have no market value. Cory's tax rate is 40%, and it uses a 10% WACC for average-risk projects. Find the required Year O investment and the project's annual net cash flows. Then calculate the project's NPV, IRR, MIRR, and payback. Assume at this point that the project is of average risk

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