Question: Calculate the depreciation expense for each year A U.S. based company wants to establish a subsidiary in Japan, use the following information. -The initial investment
Calculate the depreciation expense for each year
A U.S. based company wants to establish a subsidiary in Japan, use the following information.
-The initial investment is 100 million YEN
-The project is expected to last 5 years with a salvage value of 30 million YEN
-The prices, demand, and variable costs are as follows:
Year Price in YEN Demand (units) VC/unit in YEN
1 200 600,000 180
2 210 700,000 190
3 220 800,000 200
4 220 800,000 210
5 200 500,000 210
-Fixed costs in YEN are expected to be 10 million / year
-The company expects the NWC requirements as follows:
Initial NWC Investment of 30 million YEN
Annual NWC Requirements = 0 million YEN
Japan will impose a 25% tax on income
Depreciation expense is 10 years using the straight-line method
The Required Rate of return on the project is 15%
SHOW ALL CALCULATIONS/FORMULAS and using Excel is preferred :)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
