What change in nwc occurs at the end of year one

Assignment Help Financial Management

Reference no: EM131998804

You are evaluating a project for The Tiff-any golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Tiff-any to be $460 per unit and sales volume to be 1,200 units in year 1; 1,125 units in year 2; and 1,000 units in year 3. The project has a 3-year life. Variable costs amount to $255 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $147,000 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 $29,000. 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 39 percent and the required return on the project is 11 percent. What change in NWC occurs at the end of year 1?

Reference no: EM131998804

Questions Cloud

What is the firm horizon or continuing-value : What is the firm's horizon, or continuing, value? What is the firm's intrinsic value today, P^0?

What is shonda opportunity cost of going to the show : Suppose Shonda earns $80 per hour as a freelance photographer. She can take work at that pay rate whenever she wants.

What kind of client teaching is appropriate in situation : What do you suspect? What kind of client teaching is appropriate in this situation? When would slanting palpebral fissures be normal?

Income relative to the measured per capita incomes : If we measure income by GDP at market prices and market exchange rates, how do higher prices in Japan affect its measured per capita income

What change in nwc occurs at the end of year one : You are evaluating a project for The Tiff-any golf club, What change in NWC occurs at the end of year 1?

Market price of bond increases the current yield : All else constant, as the market price of a bond increases the current yield _____ and the yield to maturity _____.

Country macroeconomic health : What does a current account surplus say about a country's macroeconomic health?

Determine three patient safety issues : The Joint Commission National Patient Safety Goals (NPSGs) address patient safety issues within health care organizations. First, review the current NSPGs.

Explain what they are and how they arise : Data analysis is about using information and knowledge to make decisions. Identify three biases that can influence the outcome of an analysis.

User Account

All Pages