The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated...
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The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years. The cost of the machine is $30,000 and the machine will be depreciated straight line over its three-year life to a residual value of $0. The cane manufacturing machine will result in sales of 2000 canes in year 1. Sales are estimated to grow by 10% per year each year through year three. The price per cane that Sisyphean will charge its customers is $18 each and is to remain constant. The canes have cost per unit to manufacture of $9 each. Assume the firm does not need to set aside any investment in net working capital for this project. The firm is in the 35% tax bracket, and has a cost of capital of 10%. What is the incremental unlevered net income in the first year for the Sisyphean Corporation's project? The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years. The cost of the machine is $30,000 and the machine will be depreciated straight line over its three-year life to a residual value of $0. The cane manufacturing machine will result in sales of 2000 canes in year 1. Sales are estimated to grow by 10% per year each year through year three. The price per cane that Sisyphean will charge its customers is $18 each and is to remain constant. The canes have cost per unit to manufacture of $9 each. Assume the firm does not need to set aside any investment in net working capital for this project. The firm is in the 35% tax bracket, and has a cost of capital of 10%. What is the incremental unlevered net income in the first year for the Sisyphean Corporation's project?
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Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
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