Question: Please NO EXCEL using for the solution. Thank you United Pigpen is considering a proposal to manufacture high-protein hog feed. The project would make use

Please NO EXCEL using for the solution. Thank you

Please NO EXCEL using for the solution. Thank you United Pigpen is

United Pigpen is considering a proposal to manufacture high-protein hog feed. The project would make use of existing warehouse, which is currently rented out to a neighbouring firm. The next year's rental charge on the warehouse is $100,000, and thereafter the rent is expected to grow in line of the inflation at 4% per year. In addition to using the warehouse, the proposal envisages an investment in plant and equipment of $1.2 million. This could be depreciated for tax purposes straight-line over 10 years. However, Pigpen expects to terminate the project at the end of 8 years and to resell the plant and equipment in year 8 for $400,000. Finally, the project requires an initial investment in working capital of $350,000. Thereafter, working capital is forecasted to be 10% of sales in each of years 1 through 7. 1 Years 1 sales of hog feed are expected to be $4.2 million, and thereafter sales are forecasted to grow by 5% per year. Manufacturing costs are expected to be 90% of sales, and profits are subject to tax at 35%. The OCC is 12%. Calculate the NPV of Pigpen's project. United Pigpen is considering a proposal to manufacture high-protein hog feed. The project would make use of existing warehouse, which is currently rented out to a neighbouring firm. The next year's rental charge on the warehouse is $100,000, and thereafter the rent is expected to grow in line of the inflation at 4% per year. In addition to using the warehouse, the proposal envisages an investment in plant and equipment of $1.2 million. This could be depreciated for tax purposes straight-line over 10 years. However, Pigpen expects to terminate the project at the end of 8 years and to resell the plant and equipment in year 8 for $400,000. Finally, the project requires an initial investment in working capital of $350,000. Thereafter, working capital is forecasted to be 10% of sales in each of years 1 through 7. 1 Years 1 sales of hog feed are expected to be $4.2 million, and thereafter sales are forecasted to grow by 5% per year. Manufacturing costs are expected to be 90% of sales, and profits are subject to tax at 35%. The OCC is 12%. Calculate the NPV of Pigpen's project

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