Question: can you create a template using the excel format to create a cash flow statement Mark McNibble is CFO for McNabb Fabrications, Inc. Mark is
Mark McNibble is CFO for McNabb Fabrications, Inc. Mark is considering a new project that involves the introduction of a new product. McNabb has a tax rate of 25% and requires a 12 percent rate of return or discount rate for new investments. The new project is expected to last five years, and then, because this is somewhat of a fad product, it will be terminated. Given the following information, determine the net cash flows associated with the project and the project's NPV, profitability index, and internal rate of return. Apply the appropriate decision criteria and indicate if the project should be accepted or not. Cost of new plant and equipment: $235,000,000 Shipping and installation costs: $2,000,000 (directly related to the new equipment) Unit sales: 250,000 in Year 1,550,000 in Year 2: 800,000 in Year 3; 600,000 in Year 4, 300,000 in Year 5. * Sales price per unit: 5750/unit in Years 1-3, $700/unit in Year 4,5650/unit in Years Variable cost per unit: 5380/unit for year 1 and increase by inflation each year for years 2-5 * Annual fixed costs : $90,000,000 for year 1 and increase by Inflation each year for years 2-5 Assume an annual inflation rate of 2.5% McNabb has incurred $675,000 of research & development costs directly related to this new product under consideration McNabb Fabrications expects to use some of its existing manufacturing space for the new project. It McNabb did not use such space, it would be able to lease the space to another company for $650,000 per year, Working-capital requirements: There will be an initial working-capital requirement of $2,500,000 just to get production started. For each year, the total investment in net working capital will equal 8 percent of the dollar value of sales for that year. All working capital is liquidated at the termination of the project at the end of Year 5. *The depreciation method: Use the simplified straight-line method over 5 years. It is assumed that the plant and equipment will have no salvage value after 5 years
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