Determine what will the cash flows for the project be

Assignment Help Financial Econometrics
Reference no: EM13335647

You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $360 per unit and sales volume to be 1,000 units in year 1; 1,250 units in year 2; and 1,325 units in year 3. The project has a 3-year life. Variable costs amount to $205 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $153,000 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 $31,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 39 percent and the required return on the project is 12 percent.

What will the cash flows for this project be?

Reference no: EM13335647

Questions Cloud

What would be the estimated value for the average increase : Y = 20000 + 4000X. What would be the estimated value for the average increase in income from going to college for four years versus going to work directly out of high school?
How much cash will have accumulated by age 65 : If an invdividual places $5000 per year into an individual retirement account beginning at age 25, how much cash will have accumulated by age 65 if 9% interest is earned each year
Discuss the impact of good and poor communication : Discuss the impact of good and poor communication on the organisation?
Explain how many moles of gas are in the sample : If an ideal gas has a pressure of 8.79 atm, a temperature of 19.18 °C, and has a volume of 19.91 L, how many moles of gas are in the sample
Determine what will the cash flows for the project be : Variable costs amount to $205 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $153,000 in assets, which will be depreciated straight-line to zero over the 3-year project life.
Describe the production possibilities curve implications for : Describe the production possibilities curve implications for an economy that doesn’t devote current resources towards the production of capital. Be specific in your answer.
Prepare a cash budget for september : Prepare a cash budget for September, October, and November for Apache Arts Company. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required.
Prices for a hypothetical good have been falling over : Prices for a hypothetical good have been falling over an extended time period. Describe at least two non-governmentally-caused market demand conditions that might explain these decreases in price. Be specific in your answer.
Evaluate the pressure when the volume : A sample of an ideal gas has a volume of 2.21 L at 287 K and 1.11 atm. Calculate the pressure when the volume is 1.03 L and the temperature is 299 K.

Reviews

Write a Review

Financial Econometrics Questions & Answers

  Determine what is the most lisa will pay for the investment

Lisa is offered an investment that will pay her $700 every year forever starting 8 years from now. Lisa requires a return of 5% on investments of this risk level. What is the most lisa will pay for this investment

  What are the total proceeds from february 1-2012 sale

On May 1, 2011, Stanton Company purchased $50000 of Harris Company's 12% bonds at 100 plus accrued interest of $2000. On June 30, 2011, Stanton received its first semiannual interest.

  What is the annual rate of return on the stock

Will has been purchasing $25,000 worth of New Tek stock annually for the past 11 years. His holdings are now worth $598,100. What is the annual rate of return on this stock

  What volume is required to provied a pre-tax profit

Assume that a specialy group has the following cost structure and that the group expects to perform 7,500 procedures in the coming year: Variable cost per procedure $25

  Why would someone pay for the bonds of a bankrupt firm

One issue of these bonds, the 8 1/4 percent coupon bonds due in 1996, was selling at 109% of par value, or for approximately $1,090. Why would someone pay $1,090 for the bonds of a bankrupt firm?

  How much can harmony company grow to in sales

Harmony Company has current sales of $940,000. It has excess capacity in its assets in the amount of 22%. How much can Harmony Company grow to in sales without adding more assets

  What is cost of equity capital with a new capital structure

A firm has zero debt in its capital structure. Its overall cost of capital is 10%. The firm is considering a new capital structure with 80% debt. The interest rate on the debt would be 8%.

  What is the groups base case projected profit and loss

Assume that a specialty group has the following cost structure and that the group expects to perform 7,500 procedures in the coming year: Fixed costs $500,000 Variable Cost per procedure $25

  Determine the present value to invest funds at a rate

John Roberts is 50 years old and has been asked to accept early retirement from his company. The company has offered John three alternative compensation packages to induce John to retire.

  How much will invester have in account at the end of year

You invest $3,000 annually in no-load mutual fund that has a 5% exit fee. The fund earns 10% annually before fees, and you reinvest all distributions. How much will you have in the account at the end of 20 years

  Describe should blue angel invest in the project

The project will be financed at Blue Angel's target debt-equity ratio. Annual cash flows from the project will grow at a constant rate of 5.7 percent until the end of the fifth year and remain constant forever thereafter.

  What is the expected return on the firms equity

What is the expected return on the firm's equity before the announcement of the stock repurchase plan and what is the value of equity after the announcement of the stock repurchase plan?

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