Theresa Kyeremaa and Bayornaa Insurance company in daffiama kunzokalaa is considering putting up a rael estate company, Mwinlanaa Company Ltd, in Dormaa for a specific housing program. Mwinlanaa Company expect to sell 5,000 flat next year. Sales will increase to 7,500 the following year, and to 6,000 the third year after which time the line will be discontinued. The current (time zero) flat price is ¢40million per units, while costs are ¢15million per units. Both units cost and flat price rise with inflation, which is expected to be 5%. Incremental depreciation is ¢50,000 per year. Mwinlanaa Company tax rate is 34%

a) what are the project's operating cash flows?
b) If Mwinlanaa Company's real discount rate is 6% what is the present value of these cash flows?
c) If the investment capital is ¢2,000 million, what advice will you give Mwinlanaa Company at the onset of the project.

Answer rating: 100% (QA)

QUESTION A Operating cash flows Revenues Costs Taxation Depreciation is not inclu... View the full answer