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We are going to design and build a brand - new manufacturing facility to produce a new kind of high - pressure valve assembly The
We are going to design and build a brandnew manufacturing facility to produce a new kind of highpressure valve assembly
The design of the plant will take year and is expected to cost
Manufacturing of the plant will take year and will cost to build and commission
You expect the plant will produce these valves for the next years, prepare yearly incremental beforetax and aftertax cash flows
Prepare yearly incremental beforetax and aftertax cash flows
You plan for the following:
You expect to be able to sell a valve assembly for $ each
You expect to produce per year at maximum output
In Year production is expected to be of max output, Year Year and Year to
Given the difficulty in making these valves, you expect of them will not pass quality control and will be effectively garbage
You believe cost of goods sold will be $ eventually, but in the first year of production it will be $ and you expect it to decrease by $ each year until it hits $
Your fixed costs to operate the facility are expected to be $ per year
CCA rate is for the facility, and you will be able to include the costs of design, build, and commission as part of the plant
The corporate income tax rate is
This plant will be your only operation, meaning if you ever have negative taxible income, you cannot use it elsewhere ie taxible income cannot be $
a What is the total pretax cash flow at the end of years of production including capital costs Enter your answer in thousands.
$
b What is the total aftertax cash flow at the end of years of production including capital costs Enter your answer is thousands.
$
c What is the maximum contribution margin in percent, round to nearest tenths
d What year had the highest total cost of goods sold? Year
e What was the highest amount of corporate income tax paid in any year? Enter your answer in thousands. $
f What year had the highest aftertax cash flow? Year
g What is the UCC at the end of Year of operations? Enter your answer in thousands $
h What was the CCA amount at the end of Year of operations? Enter your answer in thousands
$
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