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The estimated life of this new property, plant, and equipment will be 12 years. The salvage value of the equipment will be 5% of the
The estimated life of this new property, plant, and equipment will be 12 years. The salvage value of the equipment will be 5% of the property, plant and equipments cost. The annual EBIT for this new project will be 18% of the projects cost. Your calculations that convert the projects EBIT to free cash flow for the 12 years of the project.
Here's a draft of my bit on depreciation of the new project.
Property, Plant and Equipment, net | (in millions) | |
Sep-18 | ||
Land | 46.8 | |
Buildings | 557.3 | |
Leasehold Improvements | 7372.8 | |
Store Equipment | 2400.2 | |
Roasting Equipment | 658.8 | |
Furniture, fixtures and other | 1659.3 | |
Work in Progress | 501.9 | |
Property, plant and equipment gross | 13197.1 | |
Accumulated Depreciation | -7268 | |
Property, plant and equipment , net | 5929.1 | |
Investment in New Project | ||
Investment Amount (10% of Net Property, Plant & Equip.) | 592.91 | |
Estimated Life | 12 years | |
Salvage Value | 5% | |
EBIT 18% | 106.72 | |
Tax Rate | 35% | |
Annual Depreciation Calculations | ||
Cost of Investment | 592.91 | |
Salvage Value | 29.65 | |
Depreciable cost | 563.26 | |
Depreciation Rate Per Year | 8% | |
Annual Depreciation | 46.94 |
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