Question: You are evaluating a project for The Ultimate tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to
You are evaluating a project for The Ultimate tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $430 per unit and sales volume to be 1,000 units in year 1; 1,250 units in year 2; and 1,325 units in year 3. The project has a 3-year life. Variable costs amount to $240 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $174,000 in assets, which will be depreciated straight-line to zero over the 3-year project life. The actual market value of these assets at the end of year 3 is expected to be $38,000. NWC requirement at the beginning of each year will be approximately 25 percent of the projected sales during the coming year. The tax rate is 34 percent and required return on the project is 10 percent. (Use SL depreciation) What will the cash flows for the project be? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.) I have ask this question over six time and no one have gave me the right answer. I have figure out 0, 2 and 3 but can not get 1 right and it is not 52,245
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
