Computer a schedule of operating cash flows for the 5 year

Assignment Help Business Management

Reference no: EM13246534

Used Equipment requirements $2,000,000 After 2 years, you intend to sell the equipment for $500,000 and replace the equipment with $5,000,000 of new equipment

Cost of intital inventory and supplies $500,000

You use the $1m for the reasearch and as a partial payment toward the equipemnt. You fund the remaining equipment and working capital with a credit line. The credit line requires a 10% interestpayment everyyear, but requires no principle paymnets. You will need to extend the credt line further when you sell the oldequipment, pay down thecredit line with the proceedsand then further extene the credit line for the new equipment purchase.

1st year sales $1,200,000

Sales growth 5% for first 3 years - 2% growth years 4 & 5

Cost of goods sold - 30% of sales

Selling, general and administrative - 15% of sales

Fixed costs = $240,000 per year

Depreciation - 7 years MACRS

Tax Rate - 35%

Discount Rate - 8%

1. What is the cash flow resulting from disposal of the equipment at the end of 2 years?
2. Computer a schedule of operating cash flows forthe 5 years.
3. Compute a schedule of increamtnal cash flows for the restaurant
4. Compute the projects net present value
5. Should we accept or reject the project

Reference no: EM13246534

Questions Cloud

Explain what is the final volume of a balloon : What is the final volume of a balloon that was initially 500.0 mL at 25 °C and was then heated to 50 °C

Determine what is the value of the lagrange multiplier : Suppose that a consumer has an income of $24and a utility function given by: U = 2*log(x) + log(y). The priceof x is $2 and the price of y is $2. A) Write down the Lagrangean for this consumer's maximization problem.

Major technological innovation of tang and song china : In nomadic society prior to Chinggis Khan, The Carolingian empire initially fragmented because. In nomadic society. Which of the following was not a major technological innovation of Tang and Song China?

Explain what is the ph of a solution made by titrating : What is the pH of a solution made by titrating 30.0 mL of 0.10M acetic acid with 30.0 mL of 0.10 M KOH? Assume that the volumes of the solutions are additive.

Computer a schedule of operating cash flows for the 5 year : Used Equipment requirements $2,000,000 After 2 years, you intend to sell the equipment for $500,000 and replace the equipment with $5,000,000 of new equipment

Determine horizontal force on the head : Struck from behind, a 950-kg stopped car accelerates from rest to 40km/h in 75 ms, What horizontal force on the head would accelerate it along with the rest of the body

Explain gain electrons in chemical changes : Which of the following elements would you expect to gain electrons in chemical changes

How long or short should a mission and vision statement be : What factors need to be considered to produce an appropriatemission statement and vision statement for the organization How long or short should a mission and vision statement be

Explain the solubility of calcium fluoride in a solution : What is the solubility of calcium fluoride in a solution that contains 0.015 M calcium chloride? Note calcium chloride is completely soluble in water.

User Account

All Pages