Your company has been doing well, reaching 51.12 million in earnings, and is considering launching a new product Designing the new product has already cost $537,000. The company estimates that it will sell 836,000 units per year for $2.96 per unit and variable non-labor costs will be $1.17 per unit. Production will end after year 3. New equipment costing $1.19 million will be required. The equipment will be depreciated using 100% bonus depreciation under the 2017 TCJA You think the equipment will be obsolete at the end of year 3 and plan to scrap it. Your current level of working capital is $294.000. The new product will require the working capital to Increase to a level of $385,000 immediately, then to $394,000 in year 1, in year 2 the level will be $358,000, and finally in year the level will return to $294.000. Your tax rate is 215. The discount rate for this project is 10.4%. Do the capital budgeting analysis for this project and calculate NPV Note: Assume that the equipment is put into use in year 1 (irrelevant). (Select from the drop-down menu) Design already happened and is sunk (Round to the nearest dolar) According to the bonus depreciation schedule, depreciation in year 1 will be Depreciation in years 2 and 3 will be (Round to the nearest dolar) Complete the capital budgeting analysis for this project below (Round to the Year 0 Year 1 Sales - Cost of Goods Sold Gross Profit Depreciation EBIT Incremental Earnings or a Overall Your company has been doing wellreaching 51. 12 million in comings, and is considering launching a new product Designing the new product has already cost $537,000. The company estimates that it will sell 836.000 units per year for $2 96 per unit and variable non labor costs will be $1 17 per und Production will end after year 3 New equipment costing 51 19 million will be required. The equipment will be depreciated using 100% bonus depreciation under the 2017 TCJA You think the equipment will be obsolete at the end of year 3 and plan to scrap it Your current level of working capital is $294.000. The new product will require the working capital to Increase to a level of $305,000 Immediately, then to $394.000 in year 1. in year 2 the level will be $358.000 and finally in year the level will return to $294.000 Your tax rate is 21%. The discount rate for this project is 10.4% Do the capital budgeting analysis for this project and calculates NPV Note: Assume that the equipment is put into use in year 1 Library Sales alculator - Cost of Goods Sold Gross Profit sources tudy Modules - Depreciation EBIT - Tax cation Tools Incremental Earnings Deprecation - Incremental Working Capital Capital investment Incremental Free Cash Flow The NPV of the project is (Round to the nearest dollar)
