Question: answer all boxes please even the IRR and accept the project part at the bottom Hallmark Corp. is a family-owned manufacturer of Christmas ornaments. Hallmark

answer all boxes please even the IRR and accept the project part at the bottomanswer all boxes please even the IRR and accept the project part

Hallmark Corp. is a family-owned manufacturer of Christmas ornaments. Hallmark is considering a new shatterproof plastic ornament line that has expected sales of $300,000 per year for the next 4 years. Hallmark plans to purchase new equipment for a total of $250,000 in order to manufacture the new product line. The equipment has a useful life of 4 years and a $20,000 salvage value and will be sold at the end of year 4 for its salvage value. Total variable costs of the product line are expected to be 30% of total sales, total fixed costs (excluding depreciation) will be $40,000 per year and the initial working capital investment, to buy inventory, will be $15,000. The discount rate (interest rate) for the project is 7% and the company's tax rate is 30%. a. What are the intial cash flow, annual operating cash flow, and terminal cash flow? (Negative amount should be indicated by a minus sign.) Initial Cash Outflow Annual Operating Cash Flow $ Terminal Cash Flow $ $ b. Assuming the initial cash flow is $500,000, annual operating cash flow is $150,000, terminal cash flow is $50,000, and discount rate (interest rate) for the project is 7%, calculate the net present value for this new product line. Should they take on the project? (Round the final answer to 2 decimal places.) NPV (Net Present Value) $ Accept the Project? Yes or No c. Assuming the initial cash flow is $500,000, annual operating cash flow is $150,000, terminal cash flow is $50,000 and discount rate (interest rate) for the project is 7%, calculate the internal rate of return for this new product line. Should they take on the project? (Round the final answer to 2 decimal places.) IRR (Internal Rate of Return) Accept the Project? Yes or No

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