Question: Can you please help me to construct an incremental operating cash flow statements for the next four years? Four Year Sales Forecast Description Year 1

Can you please help me to construct an incremental operating cash flow statements for the next four years?

Can you please help me to construct an incremental operating cash flow

Four Year Sales Forecast Description Year 1 Year 2 Year 3 Year 4 Units 1,500 1,575 1,605 1,626 Sales Price per Unit $240 $252 $264 $276 Unit Cost $100 $105 $110 $115 The sales price and cost are expected to increase by 4.8% per year due to inflation. Further, to handle the new line, the firm's net working capital would have to increase by an amount equal to 12% of sales revenues. The firm's tax rate is 42%, and its overall weighted average cost of capital is 12.8%. Equipment Cost $300,000 Shipping Charge $20,000 Installation Charge $22,000 Depreciable Basis = Equipment + Freight + Installation Economic Life Depreciable Basis = $342,000 Salvage Value $15,000 Tax Rate 42.0% J A Cost of Capital 12.8% Net Working Capital/Sales 12.0% Year % Basis Depreciation (% x Basis) Remaining Book Value 0.3333 $342,000 $113,989 $228,011 2 0.4445 $342.000 $152,019 $75,992 0.1481 $342,000 $50,650 $25,342 4 0.0741 $342.000 $25,342 $0 Write a 1,050 to 1,400-word analysis in which you do the following: . 11 Construct annual incremental operating cash flow statements for the next 4 years. Calculate the net present value (NPV) based on your projected cash flows. Provide rationale explaining why Custom Molds & Casting Company should purchase this equipment

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!