SodaCo is a manufacturer of soft drinks.. SodaC owns a land in Georgia that can be...

 

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SodaCo is a manufacturer of soft drinks.. SodaC owns a land in Georgia that can be used for building a Distribution Centre (DC). The company has estimated that it will cost $1M to build a high technology DC, which will lead to cost savings of 260 thousand dollars per year. The company is planning to use the DC for only 3 years and sell it at book value at the end of the third year. The DC has a life-time of 5 years after which its salvage value is $500,000. The company is using a straight-line method for calculating the depreciation. Assume a tax rate of 20% and a discount rate of 5%. Ignore inflation. The company wants to conduct a financial analysis of the investment and decide if it should build the DC. Answer the questions below. If SodaCo decides to build the DC, what would be the projected EBITDA (in thousands of dollars) associated with the investment at the end of year 1? And what would be the projected NOPAT (in thousands of dollars) associated with the investment at the end of year 3? SodaCo is a manufacturer of soft drinks.. SodaC owns a land in Georgia that can be used for building a Distribution Centre (DC). The company has estimated that it will cost $1M to build a high technology DC, which will lead to cost savings of 260 thousand dollars per year. The company is planning to use the DC for only 3 years and sell it at book value at the end of the third year. The DC has a life-time of 5 years after which its salvage value is $500,000. The company is using a straight-line method for calculating the depreciation. Assume a tax rate of 20% and a discount rate of 5%. Ignore inflation. The company wants to conduct a financial analysis of the investment and decide if it should build the DC. Answer the questions below. If SodaCo decides to build the DC, what would be the projected EBITDA (in thousands of dollars) associated with the investment at the end of year 1? And what would be the projected NOPAT (in thousands of dollars) associated with the investment at the end of year 3?

Answer rating: 100% (QA)

PROJECTED EBITDA at end of Year1 EBITDAEarning Before Interest Tax ... View the full answer