Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem: The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. Cash flows are in $ thousands and the corporate tax rate is 34%. Assume all sales revenue is received in cash, all operating costs & income taxes are paid in cash, & all cash flows occur at the end of the year.

 

Year 0

Year 1

Year 2

Year 3

Year 4

Investment

$10,000

-

-

-

-

Sales revenue

-

$7,000

$7,000

$7,000

$7,000

Operating costs

-

2,000

2,000

2,000

2,000

Depreciation

-

2,500

2,500

2,500

2,500

Net working capital (end of year)

200

250

300

200

-

[A] find out the incremental net income of the investment for each year.

[B] find out the incremental cash flows of the investment for each year.

[C] Assume the appropriate discount rate is 12%. find out the NPV of the project?

Note: The 1st step is to estimate the actual amount of cash for each year. Remember to adjust for income for non-cash items [depreciation] & the payment of taxes. This should be done for the initial investment as well as each year of the project [4 years].

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M918538

Have any Question? 


Related Questions in Basic Finance

1 what type of portfolio should a new college graduate

1. What type of portfolio should a new college graduate start to build? Briefly explain what types of assets may be good choices to include in a portfolio for these investors. 2. Explain why each of the following changes ...

The whilst co is analyzing a project that has projected

The Whilst Co. is analyzing a project that has projected sales of $189,400 and costs of $102,300. The project requires an investment in inventory of $15,000 plus another $28,000 in accounts receivable. Fixed assets of $8 ...

Make up an example of deduction or deductive reasoningin

Make up an example of deduction or deductive reasoning. In deductive reasoning, if the premises or initial observations are true, does this guarantee that the conclusion is true? Explain why or why not.

A firm that produces light bulbs claims that their

A firm that produces light bulbs claims that their lightbulbs last 1500 hours, on average. You wonder if the average might differ from the 1500 hours that the firm claims. To explore this possibility you take a random sa ...

Explain how closeout netting reduces the credit risk for

Explain how closeout netting reduces the credit risk for two firms engaged in several derivatives contracts ? How does the legal system impose risk on a derivatives dealer? Consider a firm that has assets that generate c ...

Ace investment company is considering the purchase of the

Ace Investment Company is considering the purchase of the Apartment Arms project. Next year's NOI and cash flow is expected to be $2,000,000, and based on Ace's economic forecast, market supply and demand and vacancy lev ...

1 you are trying to value zombie games inc a company

1. You are trying to value Zombie Games Inc,, a company that manufactures games for the major game systems. You have been provided the following information: · The firm generated $ 30 million as operating profit (EBIT) i ...

1 what is behavioral research what are its fundamental

1. What is behavioral research? What are its fundamental goals and limitations? Why is learning about behavioral research important? 2. In what ways is behavioral research similar to and different from research in the na ...

1 discuss how the planningcoordination and operation flow

1. Discuss how the planning/coordination and operation flow differs for MTO and MTS firms. 2. Compare and contrast the role of planning/coordination and operations in improving firm competitiveness. 3. Compare and contra ...

1 when preparing a personal statement of financial

1. When preparing a personal statement of financial condition, should assets and liabilities be presented on the basis of historical cost or estimated current value? 2. In a personal statement of financial condition, wha ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro