• The company is considering a major upgrade to their Winterville manufacturing facility. Plans call for selling the current, fully-depreciated facility for $29,000. The upgraded manufacturing facility is expected to increase annual sales by $1,590,000 and expenses (not including depreciation or income taxes) by $1,080,000, respectively. The company expects the new Winterville facility to be depreciated over 8-years, using a straight-line method, and then sold for an estimated $75,000 scrap value. $2,352,000 is the expected cost of the upgraded facility and will require an additional $42,000 in working capital for the life of the upgraded facility. The applicable corporate tax rate is 30% and the company has a weighted average cost of capital of 13.0%. 

Calculate 

Initial Cash Flow? 

Operational Cash Flow? 

Terminal Cash Flow? 

NPV? 

IRR? 

Recommend this project (Yes/No)?

Answer rating: 100% (QA)

To evaluate the financial viability of the project we need to calculate several financial metrics including the initial cash flow operational cash flo... View the full answer