Mills mining is considering an expansion project

Assignment Help Financial Management

Reference no: EM131076014

Mills Mining is considering an expansion project. The proposed project has the following features. The project has an initial cost of $607--this is also the amount which can be depreciated using the following depreciation schedule: Year 1 is 33%, Year 2 is 45%, Year 3 is 15%, and Year 4 is 7%. If the project is undertaken, at t = 0 the company will need to increase its inventories by $114, and its accounts payable will rise by $61. This net operating working capital will be recovered at the end of the projects life (t = 4). If the project is undertaken, the company will realize an additional $666 in sales over each of the next four years (t = 1, 2, 3, 4). The company’s operating cost (not including depreciation) will equal $419 a year. The company’s tax rate is 40 percent. At t = 4, the projects economic life is complete, but it will have a salvage value of $241. The projects WACC = 10 percent. What are the one-time cash flows associated with ending the project (i.e. terminal Cash Flows)? Note, we only want terminal cash flows, not operating cash flows in the last year. Show your answer to the nearest $.01. Do not use the $ or , sign in your answer.

Reference no: EM131076014

Questions Cloud

Demographic information on large number of consumer : Although demographic information on large number of consumer is used in many marketing contexts, some people feel or belive that the sale of data is an invasion of privacy and an unsolicited forfeiting of one's confidential information.

The impact of the iom report on nursing education : The impact of the IOM report on nursing education.

Form of congestion avoidance is the permit system : One form of congestion avoidance is the permit system, in which a node must have a permit before it can transmit. Suppose a wide area network is using a permit system to control suggestion.

How would you characterize the level of threat : What are the primary motivations behind international terror organizations that continue to plan to or actively strike against Western nations - How would you characterize the level of threat to the United States posed by international terrorists?

Mills mining is considering an expansion project : Mills Mining is considering an expansion project. The proposed project has the following features. The project has an initial cost of $607--this is also the amount which can be depreciated using the following depreciation schedule: What are the one-t..

Determining the fixed costs per period of production : Four companies calculate their fixed costs per period of production, and their variable costs per unit of product during the period. Each company sets a selling price and calculates the number of units of product that must be manufactured and sold..

How big will the balloon payment be : You have just arranged for a $1,660,000 mortgage to finance the purchase of a large tract of land. The mortgage has an APR of 6.6 percent, and it calls for monthly payments over the next 20 years. However, the loan has an eight-year balloon payment, ..

Primary mechanisms for reimbursement for health care : The primary mechanisms for reimbursement for health care include: Reimbursement based on a set rate per day Pays a predetermined amount per member per month Provides financial reimbursement for losses A form of prospective payment CMS uses to pay hos..

Well-known healthcare quality organizations : 1) Examine two (2) well-known healthcare quality organizations that have taken two to three (2-3) measures to improve quality within the organizations themselves.

User Account

All Pages