Marshall Industries Limited is a large publicly listed company and is the market leader in vacuum cleaner
Question:
Marshall Industries Limited is a large publicly listed company and is the market leader in vacuum cleaner manufacturing in New Zealand. The company is undertaking a six-year project to set up a manufacturing plant overseas to produce a new line of commercial vacuum cleaners. The company bought a piece of land four years ago for $ 8 million in anticipation of using it for its proposed manufacturing plant. If the company sold the land today, it would receive $ 9.75 million after taxes. In six years, the land can be sold for $14 million after taxes and reclamation costs. The manufacturing plant will cost $275 million to build. The following market data on Marshall Industries Ltd are current:
The following information is relevant:
• Marshall Industries Limited’s tax rate is 28%
• The company had been paying dividends on its ordinary shares consistently. Dividends paid during the past six years is as follows
• The project requires $8.25 million in initial net working capital investment in year zero.
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin