What are the relevant cash flows that should be used to analyze this project?

2. Please calculate OCF, NCS, and change in NWC

3. Based on the forecast of the cash flows, could

 

Superman Sport Company The CEO of Superman Sport Company, Russell War, was a mechanical He developed a sound technique of making baseball bats and founded the company. Under his loadership, the company had gained national reputation Recently, however, a new machine was developed in the industry. which would allow manufacturers to coat the aluminum baseball bats with a special compound giving them a satin finish and making them more durable and powerful. The prototype has been posted to the respective regulatory authorities and has been approved. Julian Jackson, the head of the design group, b tested the new product and reached the relevant cost and production process is that would entail Julian reported that besides the initial price tag of $350,000 for one of these machines, would have to incur shipping, handling, and installation costs of $4,500 and al fixed operating casts of about $20,000 per machine. Currently, the company incun fixed operating costs of $28,000 for gand finishing process. Initial marketing survey results indicated that the company would be able to c sales of its newly designed baseball bats by about 10% per year in the first year of induction and thereafter at a rate of 5% per year compared with forecasted sales growth of 3% per your for the c type of baseball bats. During the most recent year, the Company sold 220,000 baseball bats at a price of $12.50 per unit. The newly designed but was expected to sell for $13 per unit. Material, labor, general, and administrative costs were expected to remain constant at $10 per unt The increased sales and production requirements would entail an increase in accounts receivable of $54,000, an increase in accounts payable of $30,000, and an increase in inventory of $20,000. It was that any increase in net working capital would be recovered at the end of the useful life of the machine which was estimated to be 5 years. The exiting machine w was purchased 5 years ago for $225,000 Cuntly, a could be sold for $100,000, with the price expected to decline to about $30,000 after 5 more years of Depreciation on the existing machine was being calculated using a 10-year straight-line schedule with the assumption of residual salvage value. The new machine was expected to last for 5 yo-the same a be remaining lide of the old machine. The new machine would qualify as a 5-year clan iet under MACRS deprecationes and was expected to have a market value of approximately $20,000 of its economic life. The Company's marginal tax rate is 22% and its weighted average (required rate of reum) is estimated at 15% Part of the cost of replacing the existing machine would be financed by a bank loan that would require an annual interest expense of 10% on the unding balance The MACRS depreciation schedules are given below: of 30.00 AM 430