Question: Please answer the blanks and questions below! Also show the work on how you got it as well. Thank you so much! Research and development

Please answer the blanks and questions below! Also show the work on how you got it as well. Thank you so much!

Please answer the blanks and questions below! Also show the work onhow you got it as well. Thank you so much! Research anddevelopment Test marketing cost Initial equipment cost Equipment salvage value Year 1

Research and development Test marketing cost Initial equipment cost Equipment salvage value Year 1 depreciation Year 2 depreciation Year 3 depreciation Year 4 depreciation 10,000,000 5,000,000 140,000,000 54,000,000 14.30% 24.50% 17.50% 12.50% 38 OEM market: Price Variable cost Automobile production Growth rate Market share 5,600,000 2.50% 11.00% 59 Replacement market: Price Variable cost Market sales Growth rate Market share 14,000,000 2.00% 8.00% $ Price increase above inflation VC increase above inflation Marketing and general costs Tax rate Inflation rate Required return Initial NWC NWC percentage of sales 1% 1% 26,000,000 40.00% 3.25% 15.90% 9,000,000 $ 15% Nominal price increase Nominal VC increase Year o Year 1 Year 2 Year 3 Year 4 OEM: Automobiles sold Tires for automobiles sold SuperTread tires sold Price Replacement market: Total tires sold in market SuperTread tires sold Price Revenue: OEM market Replacement market Total Variable costs: OEM market Replacement market Total Revenue Variable costs Marketing and general costs Depreciation EBT Tax Net income OCF New working capital: Beginning Ending NWC cash flow Book value of equipment Aftertax salvage value: Market value Taxes Total Year o Year 1 Year 2 Year 3 Year 4 Year 4 Operating cash flow Capital spending Networking capital Total cash flows NPV IRR Profitability index Chapter 10 - Master It! For this Master It! assignment, refer to the Goodweek Tires, Inc. case at the end of Chapter 6. For your convenience, we have entered the relevant values in the case such as the price, variable cost, etc. on the next page. For this project, answer the following questions: What is the profitability index of the project? b. What is the IRR of the project? c. What is the NPV of the project? d. At what OEM price would Goodweek Tires be indifferent to accepting the project? Assume the replacement market price is constant. e. At what level of variable costs per unit would Goodweek Tires be indifferent to accepting the project? Research and development Test marketing cost Initial equipment cost Equipment salvage value Year 1 depreciation Year 2 depreciation Year 3 depreciation Year 4 depreciation 10,000,000 5,000,000 140,000,000 54,000,000 14.30% 24.50% 17.50% 12.50% 38 OEM market: Price Variable cost Automobile production Growth rate Market share 5,600,000 2.50% 11.00% 59 Replacement market: Price Variable cost Market sales Growth rate Market share 14,000,000 2.00% 8.00% $ Price increase above inflation VC increase above inflation Marketing and general costs Tax rate Inflation rate Required return Initial NWC NWC percentage of sales 1% 1% 26,000,000 40.00% 3.25% 15.90% 9,000,000 $ 15% Nominal price increase Nominal VC increase Year o Year 1 Year 2 Year 3 Year 4 OEM: Automobiles sold Tires for automobiles sold SuperTread tires sold Price Replacement market: Total tires sold in market SuperTread tires sold Price Revenue: OEM market Replacement market Total Variable costs: OEM market Replacement market Total Revenue Variable costs Marketing and general costs Depreciation EBT Tax Net income OCF New working capital: Beginning Ending NWC cash flow Book value of equipment Aftertax salvage value: Market value Taxes Total Year o Year 1 Year 2 Year 3 Year 4 Year 4 Operating cash flow Capital spending Networking capital Total cash flows NPV IRR Profitability index Chapter 10 - Master It! For this Master It! assignment, refer to the Goodweek Tires, Inc. case at the end of Chapter 6. For your convenience, we have entered the relevant values in the case such as the price, variable cost, etc. on the next page. For this project, answer the following questions: What is the profitability index of the project? b. What is the IRR of the project? c. What is the NPV of the project? d. At what OEM price would Goodweek Tires be indifferent to accepting the project? Assume the replacement market price is constant. e. At what level of variable costs per unit would Goodweek Tires be indifferent to accepting the project

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!