What will the cash flows for this project be

Assignment Help Financial Management
Reference no: EM131457696

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 $320 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 $185 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $141,000 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 $27,000. 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 10 percent. (Use SL depreciation table)

What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Total Cash Flow for years 0 to 3.

Year 0 1 2 3

Total Cash Flow

Reference no: EM131457696

Questions Cloud

What is the effective annual rate of a savings account : What is the effective annual rate of a savings account that pays an APR of 6% and compounds quarterly?
Considering project with cash inflows : hat is the net present value of this project if it the start-up cost is $2,700?
Stated rate number of times compounded effective rate : Stated Rate (APR) Number of Times Compounded Effective Rate (EAR)
What amount of depreciation expense should roger record : What amount of depreciation expense should Roger record in 2016 for the machine.
What will the cash flows for this project be : You are evaluating project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. What will the cash flows for this project be?
Penalty on early withdrawal of savings : On February 1, 2016, Ricardo and Marie deposited $10,000 into a one-year CD earning 2% interest at State Bank and Trust.
Perform the indicated operations and simplify : Perform the indicated operations and simplify - Multiply and simplify. Assume variables represent nonzero real numbers.
Choose one that you would like to explore : Though it might seem early to choose your topic, with only five weeks in the course, it is important to start early to best set yourself up for success.
Explain how the journal entries affect the balance sheet : ParentCo is a calendar year domestic corporation that ordered Product X from ExternalCo (foreign corporation) on November 1, 2013.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the current price of blue devil stock

Blue Devil Corporation stock, of which you own 500 shares, will pay a $2 per share dividend one year from today. Two years from now Blue Devil will close its doors and stockholders will receive a liquidating dividend of $17.5375 per share. The requir..

  Think the corporation uses job order or process costing

Continuing your research with microsoft corporation, list some of products that microsoft corporation produces and explain why you think the corporation uses job order or process costing.

  Determine the real rate of return on a bond

Determine the real rate of return on a bond when inflation is around 2.4 percent and the bond yield is 5.6 percent.

  What is the commercial paper yield

Assume an investor purchased six-month commercial paper with a face value of $1 million for $940,000.- What is the yield?

  What was the firms operating profit

Lurch Fuel Pumps, Inc. had sales of $2,500,000 and cost of goods sold of $1,710,000. Selling and administrative expenses represented 10 percent of sales. Depreciation was 6 percent of the total assets of $4,680,000. What was the firm’s operating prof..

  What kind of deal did the running back scamper off with

In 2015, a running back signed a contract worth $67.4 million. The contract called for $11.5 million immediately and a salary of $3.8 million in 2015, $10.1 million in 2016, $11.5 million in 2017, $9.7 million in 2018 and 2019, and $11.1 million in 2..

  What is the company optimal capital budget

A company has a WACC1=12.5% for funding up to $4 million when retained earnings are used. They also have a WACC2=13.7% for funding above $4 million when new equity is raised. If they have the following independent investment opportunities, which proj..

  Correct statement concerning risk premium

Over the long-term, which one of the following is a correct statement concerning risk premium?

  Describe how present and future values concepts apply

Describe how present and future values concepts apply to your income and expenses and ultimately your personal budget, income statement, and balance sheet

  Corporate bonds-what is the current price of the bond

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of E1,000, 10 years to maturity, and a coupon r..

  Present value-multiple payments-annual discounting

I want to have $1,000,000 at the end of 1 year, $1,000,000 at the end of 2 years, and $1,000,000 at the end of 3 years. If the interest rate is 5.2%, I need to invest $  now to achieve these payouts.

  What was the average real return on the stock

You've observed the following returns on SkyNet Data Corporation's stock over the past five years: 10 percent, -10 percent, 17 percent, 22 percent, and 10 percent. Suppose the average inflation rate over this period was 1.5 percent, and the average T..

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