Question: Show work in excel please. Boca Corp is considering acquiring a new segment to add to its product line. The estimated sales growth rate is
Boca Corp is considering acquiring a new segment to add to its product line. The estimated sales growth rate is 6.75% and the Boca forecasts to sell 3000 units of its new product, which is priced at 37.50 per unit. COGS is estimated at 48% of current years sales. The expansion will need an investment of $90,000 in new equipment, which will be depreciated at $25,000/year over three years. Net working capital is estimated to be 20% of sales per year. The firm also builds up initial inventory of 10% of the first year's anticipated COGS before beginning the project The firm's tax rate 30% and the firm's WACC is 10.5%. The equipment will be sold at the end of three years for $10,000. What are project free cash flows per year? What is the terminal value? What is the NPV and IRR for this project? Should you accept it
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