Question: Please show the work/steps on how to do this!! thank you! LG display will build a LCD production plant at the cost of $ 4

Please show the work/steps on how to do this!! thank you!

LG display will build a LCD production plant at the cost of $ 4 billion. The plant will produce panels larger than 40 inches using glass substrates between 2200 mm and 2500 mm with a total capacity of 120,000 units per month. The plant has an expected life of 8 years with salvage value of $200 million. If a unit generates $781 in revenues against $210 in costs, fixed annual costs are $30 million per year, and the MARR is 10% per year, answer the following:

Assume the plant is completed in a year (time zero). What is the after-tax cash flow in year 1 (in millions)? Assume 42% tax rate, a tax credit (cash flow) for all losses and the investment is depreciated with a 5 year recovery period using MACRS (DDB switching to SL with the half year convention)

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 Accounting Questions!