Adventures Plus manufactures sleeping bags, and is considering adding hiking backpacks to their product line The...

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Adventures Plus manufactures sleeping bags, and is considering adding hiking backpacks to their product line The 6-year project would require new equipment valued at $925,000. The equipment will be depreciated on a straight-line basis to zero over the life of the project, and will be salvaged for $30,000 at the end of the project. The project will also require an investment in inventory of $60,000, will increase accounts payable by $41,000 and increase accounts receivable by $21,000, All net working capital will be recovered at the end of the project. Adventures Plus expects to sell 14,000 backpacks per year at $90 each. The variable cost of backpacks will be $75 Last year, Adventures Plus sold 5,000 sleeping bags at $75. The new equipment will reduce the variable cost of sleeping bags from $35 to $30. The project will also reduce fixed production costs by $9,000 annually Adventures Plus faces a 21 percent tax rate and the company's discount rate is 14.8 percent Calculate the total incremental revenues from this project. Calculate the Operating Cash Flow for this project Identify the project cash flow in Year 0. Adventures Plus manufactures sleeping bags, and is considering adding hiking backpacks to their product line The 6-year project would require new equipment valued at $925,000. The equipment will be depreciated on a straight-line basis to zero over the life of the project, and will be salvaged for $30,000 at the end of the project. The project will also require an investment in inventory of $60,000, will increase accounts payable by $41,000 and increase accounts receivable by $21,000, All net working capital will be recovered at the end of the project. Adventures Plus expects to sell 14,000 backpacks per year at $90 each. The variable cost of backpacks will be $75 Last year, Adventures Plus sold 5,000 sleeping bags at $75. The new equipment will reduce the variable cost of sleeping bags from $35 to $30. The project will also reduce fixed production costs by $9,000 annually Adventures Plus faces a 21 percent tax rate and the company's discount rate is 14.8 percent Calculate the total incremental revenues from this project. Calculate the Operating Cash Flow for this project Identify the project cash flow in Year 0.

Answer rating: 100% (QA)

To calculate the total incremental revenues from this project we need to first determine the incremental sales revenue and the incremental cost saving... View the full answer