Prepare a statement of annual cash flows for years

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Reference no: EM13806960

THE FINAL PROBLEM IS A CALCULATION PROBLEM with multiple parts

Frozen Turkeys Scenario

Cost of Land                                                                 $ 200,000

Cost of Buildings & Equipment                                    $ 350,000

MACRS Class                                                                 20

Life of Project (Years)                                                   5

Terminal Value of Land                                                $ 300,000

Terminal Value of Buildings & Equipment                    $ 175,000

First year sales (pounds)                                               250,000

Price per Pound                                                            $3.50

Unit Sales Growth Rate                                                   7.0%

Variable Costs as % of Sales                                          62%

Fixed Costs                                                                    75,000

Tax Rate                                                                        35%

WACC                                                                           10.0%

a. Prepare a statement of annual cash flows for years 0 through 5. Cash flows in year 0 are your expenses for building and land.

Sales growth is based on the annual growth rate in units.

Assume no changes in fixed or variable costs.

Depreciate the project cost for 5 years, with the cash flow in year 5 to include the terminal cash flow of ending the investment.

b. Calculate the NPV,

c. profitability index,

d. IRR,

e. MIRR,

f. payback and

g. discounted payback of the cash flows    

 

h Using scenario manager find best case, worst case, base case of NPV based on sales in pounds, price per pound, and variable cost percent.  Make sure to include scenario summary.

Reference no: EM13806960

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