What are the project cash flows in each year

Assignment Help Financial Accounting
Reference no: EM132834133

Revenues generated by a new fad product are forecast as follows:

Year Revenues

1 $60,000

2 $40,000

3 $30,000

4 $10,000

Thereafter 0

Expenses are expected to be 30% of revenues, and working capital required in each year is expected to be 10% of revenues in the following year. The product requires an immediate investment of $81,000 in plant and equipment.

Required:

Problem a. What is the initial investment in the product? Remember working capital.

Problem b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm's tax rate is 20%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years.

Problem c. If the opportunity cost of capital is 10%, what is the project's NPV?

Problem d. What is project IRR?

Reference no: EM132834133

Questions Cloud

What is the total cost of units transferred out in May : The beginning work in process had materials cost of $2,040 and conversion cost of $1,550. What is the total cost of units transferred out in May
Determine the amount of amti : Otto and Monica are married taxpayers, If Otto and Monica's taxable income for the current year is $71,400, determine the amount of their AMTI.
What is the employer portion of social security : What is the employer's portion of Social Security and Medicare tax for the nanny that Ann should pay when she files her Form 1040 for 2020?
Difference between a point estimate and interval estimate : a) Explain the difference between a point estimate and interval estimate. b) Construct and interpret the 95% confidence interval estimate for the population
What are the project cash flows in each year : What are the project cash flows in each year? If the plant and equipment are depreciated over 4 years to salvage value of zero using straight-line depreciation
What is the net effect of the errors on Mr Suave net income : Ending inventory P13,500 understated P19,800 overstated. What is the net effect of the errors on Mr. Suave's 2021 net income
Explain the concept of factors being actionable : Explain why strengths are more important than weaknesses in strategic planning. Explain the concept of factors being "actionable."
Establish a professional culture of engagement : Establish and sustain a professional culture of engagement and commitment to shared vision, goals, and objectives pertaining to the education of the whole.
What is the optimal order quantity for mbc : The Metropolitan Bus Company (MBC) purchases diesel fuel from American Petroleum Supply. In addition to the fuel cost, American Petroleum Supply charges MBC

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd