Question: XYZ Corp. is considering introducing a new 90 flat screen television/monitor for the consumer market. The company's CFO has collected the following information about the

XYZ Corp. is considering introducing a new 90" flat screen television/monitor for the consumer market. The company's CFO has collected the following information about the proposed product. - The company will have to purchase a new machine to produce the screens. The machioe's affer-tar price would be $4,000,000 and it would cost an additional $20,000 (after-tax) to iastall the equipment. The machine required for the project was fully depreciated at the time of purchase Tie company anticipates that the machine will last for four years and then have no salvage value: - If the company goes ahead with the proposed product, it will have an effect on the cormany's aet working capital. At the outset (i.c, at t=0 ), notes payable will increase by siso,,000 and ianeatinios will increase by $270,000. At t=4, the net working cspital will be recovered after the proger is completed. - The company's tax rate is 25% What is the terminal year (t4) non-operating cash flow? $460,000 $80.000 $190,000 $270,000 Consider the following independent projects, for a firm using a cost of capital of 12% : Which project(s) should the firm accept
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
