What is the operating cash flow for the project in year two

Assignment Help Financial Management

Reference no: EM131982855

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 $430 per unit and sales volume to be 1,000 units in year 1; 1,500 units in year 2; and 1,325 units in year 3. The project has a 3-year life. Variable costs amount to $240 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $174,000 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 $38,000. 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 34 percent and the required return on the project is 10 percent. What is the operating cash flow for the project in year 2?

Reference no: EM131982855

Questions Cloud

Support comments with reasoning and evidence : In your opinion, what is the most significant barrier to reflection on your experience? Support your comments with reasoning and evidence

Phone calls coming to the receptionist : Formulate, develop, and solve a queuing problem for your business unit. For example, the phone calls coming to the receptionist, or work arriving by mail

What is monte carlo simulation : What is Monte Carlo simulation? What principles underlie its use, and what steps are followed in applying it?

Explain what you have learned about bloodstain patterns : Based on the blood pattern evidence shown in the photos, provide your interpretation as to what might have happened in this case.

What is the operating cash flow for the project in year two : The tax rate is 34 percent and the required return on the project is 10 percent. What is the operating cash flow for the project in year 2?

Contrast qualitative versus quantitative risk analysis : Compare and contrast qualitative versus quantitative risk analysis. What circumstances would each method is used.

Discuss five possible financial benefits of safety training : Discuss five possible financial benefits of safety training. Which one do you think creates the strongest argument? Which one is the weakest?

How much cash will they take from the deal : How much cash will they take from the deal? The cash will be the difference between the sell price and what is owed on the loan.

How connected are international oil markets : Also how connected are global financial markets What is the inter-relationships of the rise and fall of financial markets in Asia, Europe, and the United States

User Account

All Pages