Question: Repeat all the steps in the video Forecasting Incremental Free Cashflows. Linksys is considering the development of a wireless home networking appliance, called HomeNet. Sales
Repeat all the steps in the video "Forecasting Incremental Free Cashflows". Linksys is considering the development of a wireless home networking appliance, called HomeNet. Sales forecast for HomeNet is 50,000 units per year. Linksys expects the product will have a four-year life and an expected wholesale price of $250 Actual production will be outsourced at a cost of $110 per unit. Linksys will rent the lab space but will need to purchase $7.5 million of new equipment. The lab will be operational at the end of one year Linksys expects to spend $2.8 million per year on rental costs for the lab space. The lab equipment will be depreciated using the straight-line method over a 5-year life Linksys' marginal corporate tax rate is 40% The cost of capital for this project is 12.00% How much is the "Year o" incremental free cashflow for this project (in millions)? Enter your answer in the following format: + or -1.23, Hint #1: Answer is between -6.75 and -8.33
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