Question: PLEASE SOLVE USING AN EXCEL SPREADSHEET AND SHOW ALL FORMULAS/WORK 1. RedGreenBlue Corporation (RGB) is considering an expansion project. Equipment needed for this project will
PLEASE SOLVE USING AN EXCEL SPREADSHEET AND SHOW ALL FORMULAS/WORK
1. RedGreenBlue Corporation (RGB) is considering an expansion project. Equipment needed for this project will cost $25,500,000, the project will last for 6 years and will be depreciated as a 3-year MACRs property. 15,000 units will be sold during the first year of operations. The company expects the number of units sold to increase by 17 percent each year. Net working capital will start at $4.335.000 and will then require additional net working capital each year equal to 6 percent of the projected sales increase for the following year. Total annual fixed costs each year will be $840.000, and variable production costs are expected to be $168 per unit. Units are priced at $675 a piece. The equipment can be sold at the end of the project's life for 20 percent of its acquisition cost. RGB's cost of capital is 25 percent and its marginal tax rate is 21 percent. Should the project be accepted
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