Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

What is the terminal cash flow? if the company has 30% tax rate the projected is expected to last 5 years cost of new equipment

What is the terminal cash flow?

if the company has 30% tax rate

the projected is expected to last 5 years

cost of new equipment is $10,000,000

Sale price per unit: $280 (1y to 4 year) / $180 per unit in 5 year

(1 year - 70,000 units sold/ 2year - 100,000 units sold/ 3 year- 140,000 units sold/ 4 year -70,000 units sold/ 5 year - 60,000 units sold)

variable cost per unit $140

annual fixed cost is $300,000

working capital $100,000 (for each year, the total investment in working capital will be 10% of the dollar valye of sales for that year)

doesnt have salvage valye after 5 years

Step by Step Solution

There are 3 Steps involved in it

Step: 1

To calculate the terminal cash flow we need to determine the cash flow in the final year Year 5 and ... 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

Principles Of Managerial Finance

Authors: Lawrence J. Gitman, Chad J. Zutter

13th Edition

9780132738729, 136119468, 132738724, 978-0136119463

More Books

Students also viewed these Finance questions

Question

What is meant by Career Planning and development ?

Answered: 1 week ago

Question

What are Fringe Benefits ? List out some.

Answered: 1 week ago