Question: please help! dont know how to do the calculations developed by McNeese Students and Faculty through their R&D. McNeese requires the The Lake Charles Chemicals

please help! dont know how to do the calculations please help! dont know how to do the calculations developed by McNeese

developed by McNeese Students and Faculty through their R&D. McNeese requires the The Lake Charles Chemicals LLC is considering investing in a new gas to liquids technology company to pay a Royalty fees of $0.05/gallon of liquids once the company starts its operations. . . . The following financial information is presented for management review. Capital investment: $3 million at the beginning of year 1. This investment consists of $0.5 million in a building and $2.5 million in plant equipment. Financing: The company also borrowed $2.5 million from a national bank at 10% interest at the beginning of year 1. Depreciation method: The building and the plant equipment is depreciated based on declining balance method at a depreciation rate of 150%. Project life: 20 years after two-year of plant construction. Salvage value: $50,000 for the equipment and $600,000 for the building Total Sales: Production capacity is 5000 gal/day of methanol at a selling price of $0.80/gallon. Accounting for plant startup and shutdowns, on an average the plant will run for 330 days/year. Out-of-pocket expenditures: 10% of annual sales from year 3. Working Capital: $500,000 required at beginning of year 3. Marginal tax rate: 40% a) Determine the net after-tax cash flows over the project life b) Determine the IRR for this investment c) Determine the Present worth and equivalent annual worth for the investment at MARR = 25% . developed by McNeese Students and Faculty through their R&D. McNeese requires the The Lake Charles Chemicals LLC is considering investing in a new gas to liquids technology company to pay a Royalty fees of $0.05/gallon of liquids once the company starts its operations. . . . The following financial information is presented for management review. Capital investment: $3 million at the beginning of year 1. This investment consists of $0.5 million in a building and $2.5 million in plant equipment. Financing: The company also borrowed $2.5 million from a national bank at 10% interest at the beginning of year 1. Depreciation method: The building and the plant equipment is depreciated based on declining balance method at a depreciation rate of 150%. Project life: 20 years after two-year of plant construction. Salvage value: $50,000 for the equipment and $600,000 for the building Total Sales: Production capacity is 5000 gal/day of methanol at a selling price of $0.80/gallon. Accounting for plant startup and shutdowns, on an average the plant will run for 330 days/year. Out-of-pocket expenditures: 10% of annual sales from year 3. Working Capital: $500,000 required at beginning of year 3. Marginal tax rate: 40% a) Determine the net after-tax cash flows over the project life b) Determine the IRR for this investment c) Determine the Present worth and equivalent annual worth for the investment at MARR = 25%

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