Suppose the appropriate discount rate is 11 percent what is

Assignment Help Accounting Basics

Reference no: EM13597882

The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 31 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project.

Year 0 Year 1 Year 2 Year 3 Year 4

Investment $ 18,100
Sales revenue $9,100 $9,700 $9,600 $7,100
Operating costs 1,200 1,800 1,700 1,600
Depreciation 4,525 4,525 4,525 4,525

Net working capital spending
180 230 280 180 ?

Requirement 1:

Compute the incremental net income of the investment for each year.
Net income
Year 1 $
Year 2 $
Year 3 $
Year 4 $

Requirement 2:
Compute the incremental cash flows of the investment for each year. (Do not include the dollar signs ($). Negative amounts should be indicated by a minus sign.)
Incremental cash flow

Year 0 $
Year 1 $
Year 2 $
Year 3 $
Year 4 $

Requirement 3:
Suppose the appropriate discount rate is 11 percent. What is the NPV of the project? Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.

Reference no: EM13597882

Questions Cloud

Acme fireworks uses a traditional overhead allocation based : acme fireworks uses a traditional overhead allocation based on direct labor hours. for the current year overhead is

Farber corp a distributor of her-based sunscreen is ready : farber corp. a distributor of her-based sunscreen is ready to begin its 3-quarter in which peak sales occur. the

Jordan gonzalez is considering an investment in a : jordan gonzalez is considering an investment in a warehouse costing 340000. the projected annual income is 110000 for

Payment inc is preparing its cash budget for february the : payment inc. is preparing its cash budget for february. the budgeted beginning cash balance is 27000. budgeted cash

Suppose the appropriate discount rate is 11 percent what is : the best manufacturing company is considering a new investment. financial projections for the investment are tabulated

Bodacious engineering inc purchased a new factory machine : part b bodacious engineering inc. purchased a new factory machine on january 1 2008 for 110000. the machine has an

Sam and dennys ice cream shop charges 165 for a cone : sam and dennys ice cream shop charges 1.65 for a cone. variable expenses are 0.35 per cone and fixed costs total 2400

Lanier company began operations on january 1 2010 and uses : lanier company began operations on january 1 2010 and uses the fifo method in costing its raw material inventory.

Madlem inc produces and sells a single product whose : madlem inc. produces and sells a single product whose selling price is 240.00 per unit and whose variable expense is

User Account

All Pages