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The Corporation, a firm in the 31 percent marginal tax bracket with a required rate of return or discount rate of 12 percent, is considering
The Corporation, a firm in the 31 percent marginal tax bracket with a required rate of return or discount rate of 12 percent, is considering a new project. This project involves the introduction of a new product. This project is expected to last 5 years and then, because this is somewhat of a fad product, it will be terminated. Given the following information,determine the net cash flows associated with the project, the project's net present value, the profitability index, and the internal rate of return. Apply the appropriate decision criteria.
Homework: HW8 Chapter 12 Save Score: 0 of 20 pts 3 of 4 (0 complete HW Score: 0%, 0 of 66 pts P12-25 (algorithmic) Question Help Calculating cash flows comprehensive problem) The Corporation afin the 31 percentagnato bracket with a great of tumor contrate of 12 percent is considering a new project. This project involves the introduction of a new product This pros pected to years and then because som a tofa tad product will be sented Ghen the following information determine the chos e d with the proche ros e present at the profit index and the internal rate of retum. Apply the appropriate decision criteria a. Determine the free c hows associated with the project Data Table -X The FCF in year is (Round to the nearest dollar) Cost of new plant and equipment Shipping and installation costs Unitas $178 000 000 52100 000 Units Bold 1.100.000 2 000 000 2.000.000 100 000 00 300 Enter your answer in the answer box and then click Check Answ Sales price per unit Variable cost per unit Annual fed costs Working capital requirements: $900/unit in years through 45700unit in year 5 $300/unit $9,000 000 There will be an intal working capital requirement of $1,800.000 tot production started. For each year, the parts 9 remaining hapter 12 3 of 4 (0 complete) i Data Table Cost of new plant and equipment: Shipping and installation costs: Unit sales: $178,000,000 $2,100,000 Year AWN Units Sold 1,100,000 2,000,000 2,000,000 1,400,000 800,000 Sales price per unit: Variable cost per unit: Annual fixed costs: Working-capital requirements: $900/unit in years 1 through 4, $700/unit in year 5 $300/unit $9,000,000 There will be an initial working capital requirement of $1,800,000 to get production started. For each year, the total investment in net working capital will be equal to 9 percent of the dollar value of sales for that year. Thus, Print Done Step by Step Solution
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