Project for ultimate recreational tennis racket

Assignment Help Financial Management

Reference no: EM131322279

You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $350 per unit and sales volume to be 1,000 units in year 1; 1,250 units in year 2; and 1,325 units in year 3. The project has a 3-year life. Variable costs amount to $200 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $150,000 in assets, which will be depreciated straight-line to zero over the 3-year project life. The actual market value of these assets at the end of year 3 is expected to be $30,000. NWC requirements at the beginning of each year will be approximately 25 percent of the projected sales during the coming year. The tax rate is 34 percent and the required return on the project is 10 percent. (Use SL depreciation table) What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Year 0 1 2 3

Total cash flow $ $ $ $

Reference no: EM131322279

Questions Cloud

Contest sponsors have to deposit in the escrow account : The super prize in a contest is $10 million. This prize will be paid out in equal yearly payments over the next 20 years. If the prize money is guaranteed by AAA bonds yielding 3%and is placed into an escrow account when the contest is announced 1 ye..

What is the present value of the annuity : What is the present value of the following annuity? $3,365 every half year at the beginning of the period for the next 12 years, discounted back to the present at 3.79 percent per year, compounded semiannually.

What is the value of the fund today : Your brother who is 6 years old, just received a trust fund that will be worth $22,000 when he is 21 years old. If the fund earns 0.11 interest compound annually. What is the value of the fund today?

Which interval of production volume does breakeven occur : A company asked one of their analysis team to analyze and create models that help decide whether they should manufacture a particular product or outsource its production. Build a spreadsheet model and then construct a one-way data table with producti..

Project for ultimate recreational tennis racket : You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $350 per unit and sales volume to be 1,000 units in year 1; 1,250 units in year 2;..

In order to develop an accurate static budget : In order to develop an accurate static budget you know you need to get some facts. You ask around to see what kind of information you can gather. This is what you find out: The center pays rent of $12,000 per month. The center has a number of full-ti..

Nonconstant growth-what is the value of stock today : Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $0.50 coming 3 years from toda..

Corporate value model : Assume that today is December 31, 2016, and that the following information applies to Abner Airlines: After-tax operating income [EBIT(1 - T)] for 2017 is expected to be $650 million. Using the corporate valuation model approach, what should be the c..

Different growth rates distort a comparative ratio analysis : How might (a) seasonal factors and (b) different growth rates distort a comparative ratio analysis? Give some examples. How might these problems be alleviated?

User Account

All Pages