Construct the annual cash flows and calculate the net present value and internal rate of return...
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Construct the annual cash flows and calculate the net present value and internal rate of return for a project with the given following information: Year 2 3 4 First year sales: Unit price: Working capital: Variable cost: Fixed cost: Initial investment: Salvage value: Tax rate: Cost of capital: Unit Sales Growth 50% 25% 20% 400 units $70 years 1-2 $65 years 3-4 $2,000 initially (year 0) $25 per unit $8,000 excluding depreciation $48,000 $5,000 at the end of year 4 39% 14% Assume: (1) straight-line depreciation to zero and (2) any taxable losses can be immediately used to offset taxable income some where else in the company. Further, working capital investment is fully recovered in the final year. Construct the annual cash flows and calculate the net present value and internal rate of return for a project with the given following information: Year 2 3 4 First year sales: Unit price: Working capital: Variable cost: Fixed cost: Initial investment: Salvage value: Tax rate: Cost of capital: Unit Sales Growth 50% 25% 20% 400 units $70 years 1-2 $65 years 3-4 $2,000 initially (year 0) $25 per unit $8,000 excluding depreciation $48,000 $5,000 at the end of year 4 39% 14% Assume: (1) straight-line depreciation to zero and (2) any taxable losses can be immediately used to offset taxable income some where else in the company. Further, working capital investment is fully recovered in the final year.
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Answer rating: 100% (QA)
To construct the annual cash flows and calculate the net present value NPV and internal rate of return IRR for the project we can follow these steps 1 ... View the full answer
Related Book For
Financial Management Theory and Practice
ISBN: 978-0176517304
2nd Canadian edition
Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason
Posted Date:
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