Tax rate | 34% | ||||||
Year-0 | Year-1 | Year-2 | Year-3 | Year-4 | |||
Units | 6,000 | 6,000 | 6,000 | 6,000 | |||
Sale Price | 950 | 950 | 950 | 950 | |||
variable cost | 400 | 400 | 400 | 400 | |||
Sale | 5,700,000 | 5,700,000 | 5,700,000 | 5,700,000 | |||
Less: Operating Cost | 2,400,000 | 2,400,000 | 2,400,000 | 2,400,000 | |||
Contribution | 3,300,000 | 3,300,000 | 3,300,000 | 3,300,000 | |||
Less: Fixed Cost | 450,000 | 450,000 | 450,000 | 450,000 | |||
Less: Depreciation as per table given below | 171,480 | 293,880 | 209,880 | 149,880 | |||
Profit before tax | 2,678,520 | 2,556,120 | 2,640,120 | 2,700,120 | |||
Tax | 910,697 | 869,081 | 897,641 | 918,041 | |||
Profit After Tax | 1,767,823 | 1,687,039 | 1,742,479 | 1,782,079 | |||
Add Depreciation | 171,480 | 293,880 | 209,880 | 149,880 | |||
Cash Profit After tax | 1,939,303 | 1,980,919 | 1,952,359 | 1,931,959 | |||
Working capital-opening | - | 1,150,000 | 1,425,000 | 1,425,000 | 1,425,000 | ||
Closing working capital | 1,150,000 | 1,425,000 | 1,425,000 | 1,425,000 | - | ||
Movement | 1,150,000 | 275,000 | - | - | (1,425,000) | ||
Cost of macine | 1,200,000 | ||||||
Depreciation | 825,120 | ||||||
WDV | 374,880 | ||||||
Sale price | 600,000 | ||||||
Profit/(Loss) | 225,120 | ||||||
Tax | 76,541 | ||||||
Sale price after tax | 523,459 | ||||||
Depreciation | Year-1 | Year-2 | Year-3 | Year-4 | Total | ||
Cost | 1,200,000 | 1,200,000 | 1,200,000 | 1,200,000 | |||
Dep Rate | 14.29% | 24.49% | 17.49% | 12.49% | |||
Deprecaition | 171,480 | 293,880 | 209,880 | 149,880 | 825,120 | ||
Calculation of NPV | |||||||
28.00% | |||||||
Year | Captial | Working captial | Operating cash | Annual Cash flow | PV factor | Present values | |
0 | (1,200,000) | (1,150,000) | (2,350,000) | 1.000 | (2,350,000) | ||
1 | (275,000) | 1,939,303 | 1,664,303 | 0.781 | 1,300,237 | ||
2 | - | 1,980,919 | 1,980,919 | 0.610 | 1,209,057 | ||
3 | - | 1,952,359 | 1,952,359 | 0.477 | 930,957 | ||
4 | 523,459 | 1,425,000 | 1,931,959 | 3,880,418 | 0.373 | 1,445,569 | |
Net Present Value | 2,535,820 | ||||||
Since NPV is positive, the project should be take up |
can I get this in excel? Page l of 8 Find study resources VIEW THE STEP-BY-STEP...
1) A project has an initial requirement of $ 260,000 for fixed assets and $16,500 for net working capital. The fixed assets will be depreciated to a zero-book value over the four-year life of the project and have an estimated salvage value of $50,000. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $82,500 and the discount rate is 12 percent. What is the project's net present value...
Please solve, show work, and give detail explanation Exam #2 Review Problems Chapters 9 and 6 2. A firm has a new project that requires $210,600 of equipment. What is the depreciation expense in year 5 of the project is the equipment is classified as 7-year property for MACRS purposes? Year MACRS 14.29% 3 17.49% 4 12.49% 5 8.93% 24.49% 6 8.93% 7 8.93% 8 4.45% 3. A project has an operating cash flow of $33.000 per year. Initially, this...
Frito Lay is considering a new line of potato chips. This will be a two year project. a. Frito Lay paid $1,000,000 last year to a winning person who thought of the new line of potato chips. b. New equipment for the factory line will cost $12,000,000 and depreciation is by the 5-year MACRS method. Purchase of the equipment will require an increase in net working capital of $600,000 at time 0 (which will be recaptured at the end of...
Frito Lay is considering a new line of potato chips. This will be a two year project. a. Frito Lay paid $1,000,000 last year to a winning person who thought of the new line of potato chips. b. New equipment for the factory line will cost $12,000,000 and depreciation is by the 5-year MACRS method. Purchase of the equipment will require an increase in net working capital of $600,000 at time 0 (which will be recaptured at the end of...
MACR Year 3-Year 5-Year 7-Year 10-Year 1 33.33% 20.00% 14.29% 10.00% 2 44.45% 32.00% 24.49% 18.00% 3 14.81% 19.20% 17.49% 14.40% 4 7.41% 11.52% 12.49% 11.52% 5 11.52% 8.93% 9.22% 6 5.76% 8.93% 7.37% 7 8.93% 6.55% 8 4.45% 6.55% 9 6.55% 10 6.55% 11 3.28% Project cash flow and NPV. The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds (1957 replicas). The necessary foundry equipment will cost a total of $3,900,000 and will be depreciated...
Project cash flow and NPV. The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds (1957 replicas). The necessary foundry equipment will cost a total of $4,100,000 and will be depreciated using a five-year MACRS life,囲. Pro ected sales in annual units for the next five years are 290 per year. If the sales price is $28,000 per car, variable costs are $18,000 per car, and fixed costs are $1,300,000 annually, what is the annual operating cash flow f...
Please explain how problems solved with Excel steps shown/displayed. 2. SHELFISH 1: As the finance manager of Shelfish Incorporated, you are considering purchasing a new piece of equipment for which the company estimates: • Equipment Cost $290,000 with useful life of 7 years; straight line depreciation to a salvage value of $10,000 with 2 year convention for depreciation • Equipment purpose: to produce 10,000 shelves per year for 5 years and expects to sell all of them Equipment annual maintenance...
IDG is a venture capital fund, based in VN. Currently, this company has access to a list of “potential venture projects”. As the fund’s financial analyst, given the following information for project X, should the fund undertake this venture? To answer, first prepare a pro forma income statement for each year. Next calculate operating cash flow (OCF). Finish the problem by determining total project cash flows for each year and then calculating NPV assuming a 28% required return. Tax rate...
Aday Acoustics, Inc., projects unit sales for a new 7-octave voice emulation implant as follows: Year Unit Sales 78,000 83,400 90,200 86,300 74,300 Production of the implants will require $1,600,000 in net working capital to start and additional net working capital investments each year equal to 15 percent of the projected sales increase for the following year. Total fixed costs are $4,400,000 per year, variable production costs are $155 per unit, and the units are priced at $337 each. The...
Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 74,600 87,600 107.000 99,400 68,100 Production of the implants will require $1,900,000 in net working capital to start and additional net working capital investments each year equal to 15 percent of the projected sales increase for the following year. Total fixed costs are $4,000,000 per year, variable production costs are $263 per unit, and the units are priced at $399 each....