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FYI: THIS IS A NEW PROBLEM WITH NEW STATS, PLEASE DO NOT PROVIDE OLD ANSWERS !!...

FYI: THIS IS A NEW PROBLEM WITH NEW STATS, PLEASE DO NOT PROVIDE OLD ANSWERS !!

Mustang Enterprises, Inc., has been considering the purchase of a new manufacturing facility for $280,000. The facility is to be fully depreciated on a straight-line basis over seven years. It is expected to have no resale value after the seven years. Operating revenues from the facility are expected to be $115,000, in nominal terms, at the end of the first year. The revenues are expected to increase at the inflation rate of 2 percent. Production costs at the end of the first year will be $40,000, in nominal terms, and they are expected to increase at 3 percent per year. The real discount rate is 5 percent. The corporate tax rate is 40 percent.
   
Calculate the NPV of the project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

FYI $78,900.50 IS NOT THE ANSWER!!!

FYI $28,889.84 IS NOT THE ANSWER!!!

FYI $363,881.35 IS NOT THE ANSWER!!!

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Answer #1

1 Real interest rate 5% Inflation Nominal r 7.10 4 5 3 Cost 4 Operating revenue 5 Production cost 6 tax 7 Cash flow 8 | PV @ 7. 10% 9 NPV 10 tax 11 Operating revenue 12 Production cost 13 Dep 115000 117300 119646 122038.9 124479.7 126969.3 129508.7 -40000 -41200 42436 -43709.1-45020.4 46371 -47762.1 14000 14440 14884 -15331.9 -15783.7 -16239.3 -16698.6 280000 61000 61660 62326 62997.9 63675.61 64359 65047.95 280000 56956.12 53755.71 50734.2 47881.55 45188.27 42645.42 40244.57 57405.85 4 115000 117300 119646 122038.9 124479.7 126969.3 129508.7 -40000 -41200 42436 -43709.1-45020.4 46371 -47762.1 -40000 -40000 -40000 40000 -40000 40000 -40000 15 Taxable income 16 Tax @ 40% 17 18 35000 36100 37210 38329.84 39459.35 40598.33 41746.59 14000 14440 14884 15331.94 15783.74 16239.33 16698.63Inflation -C241 0.02 -D241 1 Real interest rate Nominal rate =F2+1 1+81) *( 1+E1)-1 -G2+1 -B2+1 -E2+1 커2+1 3 Cost 4 Operating revenue 5 Production cost 6 tax 7 Cash flow 8 PV @ 7.10% 9 NPV 280000 -04(1+296) -D5 (1+3%) --E16 -SUM(E3:E6) -E4(1+2%) -F4(1+296) -F5( 1+3%) =-G16 SUM(G3:G6) =C4+( 1+296) sC5* ( 1+396) -G4(1+2%) :G5( 1+396) ( 1+396) :-F16 -SUM(F3:F6) xH5( 1+3%) C16 -SUM(C3:C6) D16 -SUM(D3:D6) H16 116 SUM(B3:B6) SUM(H3:H6) SUM(13:16) SUM(B8:18) -C10+1 -E10+1 -F10+1 -H10+1 xH11*(1+296) *12 (1+396) H13 -B10+1 -D10+1 =G10+1 11 Operating revenue 12 Production cost 13 Dep 011( 1+296) D12( 1+396) -c12(1+396) -E12( 1+396) -G12( 1+396) =F12( 1+396) -F13 G13 :SUM(C11:C13) -C15 0.4 :SuM(D11:D13) D15 0.4 =SUME11:E13) -E15 0.4 =SUM(F11:F13) -F15 0.4 =SUM(G11:G13) -G15*0.4 =SUM(H11:H13) 커15°0.4 =SUMI 111:113) -115 0.4 15 Taxable income 16 Tax @ 40% 0

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