Homework

Question $6,$ P $9-33($similar to$)$

Part $1$ of $8$

HW Score: $30\mathrm{.}36\%,2\mathrm{.}13$ of $7$ points

Points: $0$ of $1$ is expected to be $72\%$ of their sale price. The increased production will also require increased inventory on hand of $$1\mathrm{.}09$ million during the life of the project, including year $0.$

Human Resources: The expansion will require additional sales and administrative personnel at a cost of $$1\mathrm{.}97$ million per year. to be $11\%$ of the cost of goods sold. Billingham's marginal corporate tax rate is $21\%.$

a$.$ Determine the incremental earnings from the purchase of the XC$-750.$

b$.$ Determine the free cash flow from the purchase of the $xC-750.$

c$.$ If the appropriate cost of capital for the expansion is $9\mathrm{.}7\%,$ compute the NPV of the purchase.

e$.$ What is the break$-$even level of new sales from the expansion? What is the breakeven level for the cost of goods sold?

a$.$ Determine the incremental earnings from the purchase of the $xC-750.$

Calculate the incremental earnings from the purchase of the XC$-750$ below $($with vs$.$ without XC$-750)$: $($Round to the nearest dollar.$)$

Incremental Effects $($with vs$.$ without XC$-750)$

Year

$0$

$1-10$

Sales

$

Cost of Goods Sold

Selling, General, and Administrative Expenses

Depreciation

EBIT

Taxes at $21\%$

Unlevered Net Income

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