identify an error in either NWC or cash flows. Assumptions: R&D expense Test marketing expense Investment in

  identify an error in either NWC or cash flows.   

 

 

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Assumptions: R&D expense Test marketing expense Investment in equipment Salvage value at end of year 4 # of tires per car sold for OEM market Time of project in years Depreciation rates for 7-year MACRS OEM Market: Sales Automobile production (note: each car Goodweek market share Sales growth rate market: Price Replacement Sales Total market sales Goodweek market share Sales growth rate Price Variable cost Growth rate of prices & variable costs Fixed Costs (SG&A) Growth rate of SG&A Tax rate Inflation Discount Rate NWC in year 0 NWC in years 1-3 as % of sales year 1 year 2 year 3 year 4 Sales OEM Market: Units (grow at 2.5%) Price (grows at 4.25%) Total Sales OEM Market Year $10,000,000 $5,000,000 $160,000,000 $65,000,000 4 4 14.30% 24.50% 17.50% 12.50% 6,200,000 11.00% 2.50% $41.00 32,000,000 8.00% 2.00% $62.00 $29.00 4.25% $43,000,000 3.25% 23.00% 3.25% 13.40% $9,000,000 15.00% 0 1 6,200,000.00 2,728,000 $41.00 111,848,000 Depreciation Schedule: Year 1 2 3 4 2 6,355,000.00 2,796,200 $42.74 119,516,579 Depreciation 22,880,000 33,594,400 18,116,980 10,676,078 3 6,513,875.00 2,866,105 $44.56 127,710,934 Ending Book Value 137,120,000 103,525,600 85,408,620 74,732,543 6,676,721.88 2,937,758 $46.45 136,467,115 Assumptions: R&D expense Test marketing expense Investment in equipment Salvage value at end of year 4 # of tires per car sold for OEM market Time of project in years Depreciation rates for 7-year MACRS OEM Market: Sales Automobile production (note: each car Goodweek market share Sales growth rate market: Price Replacement Sales Total market sales Goodweek market share Sales growth rate Price Variable cost Growth rate of prices & variable costs Fixed Costs (SG&A) Growth rate of SG&A Tax rate Inflation Discount Rate NWC in year 0 NWC in years 1-3 as % of sales year 1 year 2 year 3 year 4 Sales OEM Market: Units (grow at 2.5%) Price (grows at 4.25%) Total Sales OEM Market Year $10,000,000 $5,000,000 $160,000,000 $65,000,000 4 4 14.30% 24.50% 17.50% 12.50% 6,200,000 11.00% 2.50% $41.00 32,000,000 8.00% 2.00% $62.00 $29.00 4.25% $43,000,000 3.25% 23.00% 3.25% 13.40% $9,000,000 15.00% 0 1 6,200,000.00 2,728,000 $41.00 111,848,000 Depreciation Schedule: Year 1 2 3 4 2 6,355,000.00 2,796,200 $42.74 119,516,579 Depreciation 22,880,000 33,594,400 18,116,980 10,676,078 3 6,513,875.00 2,866,105 $44.56 127,710,934 Ending Book Value 137,120,000 103,525,600 85,408,620 74,732,543 6,676,721.88 2,937,758 $46.45 136,467,115

Answer rating: 100% (QA)

Based on the information given 1 Identify an error in either the NWC or cash flows calculation The N... View the full answer