Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are evaluating a project for The Uitimate recreational temis racket, guatanteed to correct that wimpy backhand. You estimate the sales price of The Uitimate

image text in transcribed
You are evaluating a project for The Uitimate recreational temis racket, guatanteed to correct that wimpy backhand. You estimate the sales price of The Uitimate to be $440 per unit and sales volume to be 1,000 units in year 1, 1,250 units in year 2, and 1,325 units in year 3. The project has a 3 -year life. Variable costs amount to $245 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $177,000 in assets, which can be depreciated using bonus depreciation. The actual market value of these assets at the end of year 3 is expected to be $39,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 21 percent and the required refurn on the project is 11 percent. (Use Sl depreciation table) What will the cash flows for this project be? Note: Negatlve amounts should be indicated by a minus sign. Round your answers to 2 decimal places. You are evaluating a project for The Uitimate recreational temis racket, guatanteed to correct that wimpy backhand. You estimate the sales price of The Uitimate to be $440 per unit and sales volume to be 1,000 units in year 1, 1,250 units in year 2, and 1,325 units in year 3. The project has a 3 -year life. Variable costs amount to $245 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $177,000 in assets, which can be depreciated using bonus depreciation. The actual market value of these assets at the end of year 3 is expected to be $39,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 21 percent and the required refurn on the project is 11 percent. (Use Sl depreciation table) What will the cash flows for this project be? Note: Negatlve amounts should be indicated by a minus sign. Round your answers to 2 decimal places

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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_2

Step: 3

blur-text-image_3

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

Ebay Tips And Tricks To Increase Your Ebay Sales

Authors: Jessica Wilson

1st Edition

1774854015, 978-1774854013

More Books

Students also viewed these Finance questions