Incremental cash flow at the beginning of the project

Assignment Help Business Management

Reference no: EM131806144

You are the CFO of SlimBody, Inc., a retailer of the exercise machine Slimbody and related accessories. Your firm is considering opening up a new store in Los Angeles. The store will have a life of 20 years. It will generate annual sales of 4,500 exercise machines, and the price of each machine is $2,500. The annual sales of accessories will be $600,000, and the operating expenses of running the store, including labor and rent, will amount to 50 percent of the revenues from the exercise machines. The initial investment in the store will equal $27,000,000 and will be fully depreciated on a straight-line basis over the 20-year life of the store. Your firm will need to invest $2,500,000 in additional working capital immediately, and recover it at the end of the investment. Your firm's marginal tax rate is 30 percent. The opportunity cost of opening up the store is 10.20 percent. What are the incremental free cash flows from this project at the beginning of the project as well as in years 1-19 and 20? Should you approve it? (Round answers to the nearest dollar, e.g. 5,275. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Incremental cash flow at the beginning of the project$

Incremental cash flow in the years 1-19$

Incremental cash flow in the year 20$

NPV of the project$

You

should not approve

should approve

the project.

Reference no: EM131806144

Questions Cloud

What is the appropriate reorder? point : Barbara Flynn is in charge of maintaining hospital supplies at General Hospital. What is the appropriate reorder? point?

What amount should kane report as pension asset : In its December 31, 20X8 balance sheet, what amount should Kane report as pension asset/liability

Incremental cash flow associated with accounts receivable : The annual revenue of the division is estimated to be $23,000. Assuming that the customers take the full 20 days to pay

What are the pros and cons of triaging and treating patients : What are the pros and cons of triaging and treating patients at the scene of an event (as the British do) as opposed to the scoop and run method?

Incremental cash flow at the beginning of the project : You are the CFO of SlimBody, Inc., a retailer of the exercise machine Slimbody and related accessories. Your firm is considering opening up a new store

What are the nature and amount of jason gain or loss : Jason sold the bonds for $383,000 after amortizing $1,000 of the original issue discount. What are the nature and amount of Jason's gain or loss

Explain why diversification is a wise strategy : ??Given the benefits of diversification, why shouldn't managers acquire firms in different industries to diversify a company?

What is the economic order quantity? for kona coffee? beans : What is the economic order quantity? (EOQ) for Kona coffee? beans? What are the total annual holding costs of stock for Kona coffee? beans?

Infor about beginning account payable : When an financial exercise does not have infor about beginning account payable, how can I calculate it ? Or should I commit that it equals 0?

User Account

All Pages