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there are two answers posted for this question. can you confirm which one is the correct...

there are two answers posted for this question. can you confirm which one is the correct one and why? ---------------------- question: You are considering a new product launch. The project will cost $950,000 and have a four-year life with no salvage value. Assets for the project are depreciated straight line down to zero. Projected sales are 220 units per year. The price per unit is $18,400 while variable cost per unit is $14,900. Fixed costs per year are $320,000. The firm
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Answer #1
answer 1: EBDIT= 220(18400-14900)-320000= $450000 Less dep: (950000/4)= 237500 EBT= 212500 EAT(65%)= 138125 Cashflow= 138125+237500= $375625 PV= 375625/1.12+(375625/1.12^2)+(375625/1.12^3)+(375625/1.12^4)= $1140904.35
This is the correct answer.
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Answer #2
Hi, I believe the second answer was posted by me. However, it is not correct, because I did not took into account the amount of depreciation. Correct answer is as below: OCF = [(18,400
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