Presents sales forecasts for golden gelt giftware

Assignment Help Financial Management

Reference no: EM131869698

The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $40. The unit cost of the giftware is $20.

Year Unit Sales

1 37,000

2 45,000

3 14,000

4 8,000

Thereafter 0 It is expected that net working capital will amount to 20% of sales in the following year. For example, the store will need an initial (Year 0) investment in working capital of .20 × 37,000 × $40 = $296,000. Plant and equipment necessary to establish the giftware business will require an additional investment of $215,000. This investment will be depreciated using MACRS and a 3-year life. After 4 years, the equipment will have an economic and book value of zero. The firm’s tax rate is 40%. What is the net present value of the project? The discount rate is 15%. Use the MACRS depreciation schedule. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

Reference no: EM131869698

Questions Cloud

Price equivalent two week american put by hand : Price equivalent two week American Put by hand.

Determine their investment plan for the year : It is January 2nd and senior management of Baldwin meets to determine their investment plan for the year.

Using the black-scholes option pricing model : Using the Black-Scholes option pricing model, how much is the equity worth?

Convert accounts of its non-us subsidiaries into us dollars : Describe (Summarize) both companies methods used to convert the accounts of its non-U.S. Subsidiaries into U.S. dollars.

Presents sales forecasts for golden gelt giftware : The following table presents sales forecasts for Golden Gelt Giftware. What is the net present value of the project?

Explain what the author means by lexical gap : In Case 2: The Politics of Notating African Rhythm, what is the author's argument about notation? Explain what the author means by Lexical Gap.

Formulate a linear program to help organic greenhouses : They employ 30 people. Each acre of pepper plants requires 1.5 workers to tend and harvest the plants and each acre of tomatoes requires 3 workers.

Which theory relates to your current belief system : Name and discuss the three categories of ethical theories. Which theory relates to your current belief system, professional values, or business experience .

Explain the hindu concept of brahman-atman : Explain the Hindu concept of Brahman/Atman and its implications for how one sees life (the world is "illusion," individual self is unimportant, etc.).

User Account

All Pages