What change in nwc occurs at the end of year one

Reference no: EM131971066

Question: You are evaluating a project for your company. You estimate the sales price to be $690 per unit and sales volume to be 3,900 units in year 1; 4,900 units in year 2; and 3,400 units in year 3. The project has a three-year life. Variable costs amount to $490 per unit and fixed costs are $295,000 per year. The project requires an initial investment of $420,000 in assets which will be depreciated straight-line to zero over the three-year project life. The actual market value of these assets at the end of year 3 is expected to be $69,000. NWC requirements at the beginning of each year will be approximately 15 percent of the projected sales during the coming year. The tax rate is 40 percent and the required return on the project is 8 percent. What change in NWC occurs at the end of year 1?

Reference no: EM131971066

Questions Cloud

Find the effect of this transaction on companys assets : What is the effect of this transaction on the company's assets, liabilities, and income before income taxes?

Calculate value of the option using given model : A European call option on a stock that is epexted to pay two dividends during the life of the option: a $0.95 dividened in two months, and a $1.00 dividend.

Summarize the requirements for an effective hearing : Summarize the requirements for an effective hearing conservation program and discuss steps to make the program as effective as possible.

Determine the capital recovery cost of this investment : Determine the capital recovery cost of this investment if the minimum attractive rate of return is 14% per year.

What change in nwc occurs at the end of year one : You are evaluating a project for your company. You estimate the sales price to be $690 per unit and sales volume to be 3,900 units in year 1; 4,900 units.

What is the value of this forward contract : This stock pays dividend payment of $3 each in first year and second year, respectively. What is the value of this forward contract?

Evaluate the consequences to a publically traded company : Evaluate the consequences to a publically traded company when there is a lack of quality within financial accounting and reporting.

Osteoporosis compression fractures to spine due osteoporosis : Mrs Chan's past medical history includes: Urinary incontinence, Osteoporosis Compression fractures to her spine due osteoporosis, Removal of a Stage II melanoma

Evaluating a growing perpetuity product : You are evaluating a growing perpetuity product from a large financial services firm. The product promises an initial payment of $20,000.

User Account

All Pages