Mark is expanding a new product to help with in the construction market. His marketing manager thinks the company can sell
1
2
0
,
0
0
0
units per year at a price of $
3
.
7
5
each for
3
years, after which the product will be obsolete. The purchase price of the required equipment, including shipping and installation costs, is $
1
5
0
,
0
0
0
,
and the equipment is eligible for
1
0
0
%
bonus depreciation at the time of purchase. Current assets
(
receivables and inventories
)
would increase by $
4
5
,
0
0
0
,
while curent liabilities
(
accounts payable and accruals
)
would rise by $
2
0
,
0
0
0
.
Variable cost per unit is $
1
.
9
5
,
and fixed costs would be $
7
0
,
0
0
0
per year. When production ceases after
3
years, the equipment should have a market value of $
1
5
,
0
0
0
.
Marks tax rate is
2
5
%
,
and it uses a
1
0
%
WACC for a
.
Find the required Year
0
investment outlay after bonus depreciation is considered and the project’s annual cash flows.
Then calculate the project’s NPV
,
IRR, MIRR, and payback. Assume at this point that the project is of average risk.
MUST SUBMIT FORMULAS TOO
Category: BUSINESS FINANCE
Create a really attractive resume and cover letter using the information in the pdf, this is for a job position, so pls surptise me if you can
Create a really attractive resume and cover letter using the information in the pdf, this is for a job position, so pls surptise me if you can
The spreadsheet is attached with questions, fill that out.
Boisjoly Enterprises is considering buying a vacant lot for an after-tax cost of $1.4 million. If the property is
purchased, the company’s plan is to invest another $6 million after taxes today (t = 0) to build a hotel on the property.
The after-tax cash flows from the hotel will depend critically on whether the state imposes a tourism tax in this year’s
legislative session. If the tax is imposed, the hotel is expected to produce after-tax cash flows of $500,000 at the end
of each of the next 15 years. If the tax is not imposed, the hotel is expected to produce after-tax cash flows of
$1,200,000 at the end of each of the next 15 years. The project has a 12% WACC. Assume at the outset that the
company does not have the option to delay the project