Question: please help! Smith Industries has a proposed four-year project with $220,000 equipment cost and shipping cost of $20,000. The equipment falls under trre 5-year category
Smith Industries has a proposed four-year project with $220,000 equipment cost and shipping cost of $20,000. The equipment falls under trre 5-year category MACRS depreciation-- 20%,32%,19%,128,11%, and 6% (i.e. there will be book value at end of project in year 4). Account Receivables will increase by $18,000. Account Payables will increase by $9,000. Inventory will increase by $7,000. The estimated annual EBITDA will be $65,000 per year for each of EOUR years. The equipment is expected to be sold for $22,000 in year 4 . The firm's marginal tax rate is 40%. Smith Industries estimates that an 11 percent return is required for this project, a. Find the CAPEX at t=0 b. Find the annual depreciation for each year c. Find the Free Cash Flow for year 3 d. Find book value at the end of year 4 e. Find net proceeds (after-tax salvage value) in year 4 from the sale of the equipment
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