Question: Youi company is developing a new textbook for FIN 301 and you paid your current FIN 301 instructor $900,000 Ior his input about the feasibility
Youi company is developing a new textbook for FIN 301 and you paid your current FIN 301 instructor $900,000 Ior his input about the feasibility of such a product The project would involve initial capitalinvestment of $1,200,000 and installation costs related to the capital expenditures of $600,000 the project would also necessitate an increase in net working capital of $400,000 at the beginning of the project You can straightline depreciate any depreciable expenses to zero over the three-year life of the project, and you don't expect the capital investment to be sold at the end of the project. Each year, you estimate you will receive $3,000,000 in sales revenue from your awesome textbook. Variable product and selling costs associated with these sales are expected to be 20% of revenue in each of those years. The fixed costs in each of the three years of the project will be $500,000. The corporate tax rate is 40% Calculate the total year o cash flows associated with the project Calculate the year 1 EBII Galculate the TOTAL year 1 cash flows associated with the project Caiculate the TOIAL year 3 cash flows associated with the project
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
