Question
The company is planning to introduce a new product to the market. Before that, the necessary product development investment is estimated to be 8.8 M.
The company is planning to introduce a new product to the market. Before that, the necessary product development investment is estimated to be 8.8 M. In the first year, the sales volume of the product is estimated at 100,000 units and the selling price at 200/unit. Sales revenue is assumed to grow by 10% annually. The variable costs corresponding to the sold deliverables are 50% percent of sales revenue throughout the product's life cycle. The product is estimated to be sold and manufactured for 3 years. Annually, 2.8 million must be invested in marketing and administration. Although the production of the product is practically purchased from a contract manufacturer, in order to organize the service related to the product as an essential part, an initial investment of 6.3 M in equipment and software must be made. It is written off in profit and loss accounting and taxation in three years with straight-line depreciation. The company's income tax rate is 20%. Due to the arrangement made with the contract manufacturer, the company has practically no inventories, but accounts receivable are estimated to be 15% of sales revenue and accounts payable 13% of the costs corresponding to the goods sold.
give the values requested in subsections 1-10, rounded to the nearest thousand euros [k].
What is the free cash flow in year 0? (correct answer for this is -13340k)
What is the committed net working capital at the end of year 1?
What is the year 1 free cash flow?
What is the net working capital committed at the end of year 2?
What is the increase in net working capital in year 2?
What is the year 2 free cash flow?
What is the year 3 operating profit (EBIT)?
What is the increase in net working capital in year 3?
What is the free cash flow in year 3?
What is the free cash flow in year 4?
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