Company produces candy and considers introducing new flavor

Assignment Help Financial Management

Reference no: EM132053179

Your company produces candy and considers introducing a new flavor. A year ago, the company spent $18,500 on a marketing survey to learn about consumer interest in this flavor. If this new type of a candy is produced and offered for sale, the estimated revenue in Year 1 is $300,000. Sales are forecasted to grow at a rate of 4% per year. Incremental variable costs are expected to be 65% of incremental revenues. The net working capital in Year 0 is expected to be $74,000 with a full recovery at the end of the project. This project requires an immediate investment of $120,000 in equipment. The equipment is to be depreciated over 10 years on a straight-line basis to zero value. The new candy flavor will be discontinued in 5 years, and the project will end. At the end of this project, the equipment will be sold for $86,000. The tax rate is 40%, and the required rate of return is 12%.

How do I find the sales, deoreciation, variable costs, EBIT, Taxes, Net Income?

Reference no: EM132053179

Questions Cloud

Determine the most productive way of deploying capital : There are many different scenarios that we have to determine the most productive way of deploying capital,

What is expected return to zenyatta stock : Suppose the beta of Zenyatta Inc. is estimated to be 1.3, what is the expected return to Zenyatta stock?

What is current price per share : After that, the dividends will increase by 3.25 percent annually. The required return on this stock is 13.53 percent. What is the current price per share?

Find the total cash flow you will have six years : Find the total cash flow you will have 6 years from now if interest rates remain unchanged throughout your planning horizon.

Company produces candy and considers introducing new flavor : Your company produces candy and considers introducing a new flavor. How do I find the sales, deoreciation, variable costs, EBIT, Taxes, Net Income?

What would be appropriate estimate of stock price today : What would be an appropriate estimate of the stock price today?

The default probability of the corporate debt is low : High CDS spread means the default probability of the corporate debt is low.

Identifies method for calculating beta : Which of the following identifies a method for calculating beta? What is the average (arithmetic) return?

Net present value analysis and uncertain cash flows : Compute the annual net cost savings promised by the automated welding machine. Would you recommend purchasing the automated welding machine?

User Account

All Pages