Question: Using the Net Cash Flows from your NPV calculations, prepare a comprehensive Financial plan for the investment (VoFI table) based n the following information. Acme
Using the Net Cash Flows from your NPV calculations, prepare a comprehensive Financial plan for the investment (VoFI table) based n the following information.
Acme Food Co. Ltd. is considering the introduction of a new product Smackers. The firm has gathered and provided your group the following information relevant to the project: Initial fixed capital outlay: $135,000 Initial working capital outlay: $10,800 Life of the project: 8 years Capital recovery at project end: fixed $20,000; working 88,200 Sales units forecast: 70,000 units in year one, growing at 7.00% per annum thereafter Unit selling price: $3.75 Unit production cost: $1.78 Annual fixed overhead cost: $45,000 Annual tax rate of depreciation claimable: 20% per annum Annual income tax rate: 35% Required rate of return: 9% per annum. Acme proposes to use $50,000 of its own funds which can provide an alternative investment return of 7% and take a Current Account loan for the rest of the needed capital outlay at 11% per annum. Surplus cash flows can be invested at 6% or used to redeem the loan. Acme Food Co. Ltd. is considering the introduction of a new product Smackers. The firm has gathered and provided your group the following information relevant to the project: Initial fixed capital outlay: $135,000 Initial working capital outlay: $10,800 Life of the project: 8 years Capital recovery at project end: fixed $20,000; working 88,200 Sales units forecast: 70,000 units in year one, growing at 7.00% per annum thereafter Unit selling price: $3.75 Unit production cost: $1.78 Annual fixed overhead cost: $45,000 Annual tax rate of depreciation claimable: 20% per annum Annual income tax rate: 35% Required rate of return: 9% per annum. Acme proposes to use $50,000 of its own funds which can provide an alternative investment return of 7% and take a Current Account loan for the rest of the needed capital outlay at 11% per annum. Surplus cash flows can be invested at 6% or used to redeem the loan
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
