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Allied foods is evaluating a new product, fresh lemon juice. The required equipment would cost $480,000. Inventories would rise by $50,000, while accounts payable would go by $10,000. The machinery would be depreciated using the 3=year MACRS system. (Year 1=33%, Year 2=45%, Year 3=15% and Year 4=7%) The project is expected to operate 4 years, at which time it will be terminated. At the end of the projects life, the eqquipment is expected to have a salvage value of $55,00. Unit sales are excepted to total 200,000 cans per year. Similar products are fetching $2.00 per unit now, and expected inflation is 5% per year for the next four years. Operating cost less depreciation are excepted to be 60 percent of sales. Allied tax rate is 40% and its WACC is 10%. The lemon jucie project is an average risk project.
a. Calculate the initial investment, operating cash flows and terminal cash flows.
b. What is the NPV of this project?
c. What is the IRR of this project?
d. What is the Payback Period?
calculate the present value of per carton. (Do not round intermediate calculations. Round your answer to 3 decimal places.) Present value $ per carton.
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Use the AFN equation to forecast the additional funds Carter will need for the coming year. Round your answer to the nearest cent.
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If so, what are/were they? Please share with the class what they are/were and why you think that they didn't follow this principle.
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Exemptions for the elderly reduce assessed value by $3,000,000. The city has a planned budget of $3,500,000 and expects to receive $750,000 in nonproperty tax revenue.
A firm is reviewing a project that has an initial cost of $71,000. The project will produce annual cash inflows, starting with year 1, of $8,000, $13,400, $18,600, $33,100, and finally in year 5, $37,900. What is the profitability index if the dis..
Your firm needs to increase $10 million. Suppose that flotation costs are expected to be $15 per share and that the market price of the stock is $120,
include depreciation and working capital in the following NPV analysis, because depreciation for the machinery goes for longer than the project timeline, and working capital needs to be accounted for as a percentage of sales.
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