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Using forecasted sales, operations margin administrative and advertising expenses we calraded income after taxes. (Detailed calculation given at Investment Opportunity (NPV)). To co.npute NOPAT,
Using forecasted sales, operations margin administrative and advertising expenses we calraded income after taxes. (Detailed calculation given at Investment Opportunity (NPV)). To co.npute NOPAT, we added dereciation expenses back to the income after taxes. In addition, project's sponsors are expecting that NWC would be 26.5% of the upcoming year's sales, so to calculate FCF we used this equation: FCF-NO-AT-change in NWC. To evaluate project we got the investment's annual net cash flows set up as a time line and used C.97% WACC. Calc-ilations show that new product line's NPV is positive (See the sheet Investment Opportunity (NPV)). If 1-PV is positive, then more than enough cash flow is generated to recover cost of the investment. IRR and MIKR both are greater than WACC. To determine MIRR we used the same 9.97% WACC for discounting and reinvestment rate. Payback period shows that 2.72 years are required to recover the investment. Generally, the shorter is
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