Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The project requires an investment of $10 million in mining machinery and at the end of 5 years the machinery has no further value. Working

The project requires an investment of $10 million in mining machinery and at the end of 5 years the machinery has no further value. Working capital increases as the project gears up in the early years, but later in the projectss life, the investment in working capital is recovered. Working capital year 0, 1, 2, 3, 4 and 5: $1500000, $4075000, $4279000, $4493000, $4717000, and $3039000 subsequently. The compnay expects to sell 750,000 pounds magnoosium a year at a price of $20 a pound in year 1 and the revenue is expected to grow at 5% every year. The expenses in year 1 is $10million and is expected to increase in line with the revenue growth rate. Straight line depreciation is applied. Tax is 35%. Calculate net cash flow

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Production And Operations Analytics

Authors: Steven Nahmias, Tava Lennon Olsen

8th Edition

1478639261, 9781478639268

More Books

Students also viewed these Finance questions