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P12-25 (algorithmic) Question Help - (Calculating cash flows-comprehensive problem) The C Corporation, a firm in the 30 percent marginal tax bracket with a required rate of return or discount rate of 13 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, B , determine the net cash flows associated with the project, the project's net present value, the profitability index, and the internal rate o return. Apply the appropriate decision criteria. Data Table X a. Determine the free cash flows associated with the project. The FCF in year is $. (Round to the nearest dollar.) Cost new plant and equipment: $228,000,000 Shipping and installation costs: $2,100,000 Unit sales: Year Units Sold 1 900.000 2 1,500,000 3 1,500,000 4 900,000 5 600,000 Sales price per unit: Variable cost per unit: Annual fixed costs: Working-capital requirements: $700/unit in years 1 through 4, $500/unit in year 5 $250/unit $9,000,000 There will be an initial working capital requirement of $1,700,000 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, the investment in working capital will increase during years 1 through 3, then decrease in year 4. Finally, all working capital is liquidated at the termination of the project at the end of year 5. Use the simplified straight-line method over 5 years. It is assumed that the plant and equipment will have no salvage value after 5 years. Enter your answer in the answer box and then click Check Answ The depreciation method: 9 parts remaining P12-25 (algorithmic) Question Help - (Calculating cash flows-comprehensive problem) The C Corporation, a firm in the 30 percent marginal tax bracket with a required rate of return or discount rate of 13 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, B , determine the net cash flows associated with the project, the project's net present value, the profitability index, and the internal rate o return. Apply the appropriate decision criteria. Data Table X a. Determine the free cash flows associated with the project. The FCF in year is $. (Round to the nearest dollar.) Cost new plant and equipment: $228,000,000 Shipping and installation costs: $2,100,000 Unit sales: Year Units Sold 1 900.000 2 1,500,000 3 1,500,000 4 900,000 5 600,000 Sales price per unit: Variable cost per unit: Annual fixed costs: Working-capital requirements: $700/unit in years 1 through 4, $500/unit in year 5 $250/unit $9,000,000 There will be an initial working capital requirement of $1,700,000 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, the investment in working capital will increase during years 1 through 3, then decrease in year 4. Finally, all working capital is liquidated at the termination of the project at the end of year 5. Use the simplified straight-line method over 5 years. It is assumed that the plant and equipment will have no salvage value after 5 years. Enter your answer in the answer box and then click Check Answ The depreciation method: 9 parts remaining
