You are starting a new project.This project would last 4years. The following is the input information that you have collected: Buildinf cost(1.3% in the first year and 2.6% every year)....................................$12,000,000 Equipment cost (MACRS 5 years)........................................................................$8,000,000 Net operating working capital requirement(% of sales)...........................................10% First year sales(in units)............................................................................................20,000 Growth rate in units sold.............................................................................................0% Sales price per unit......................................................................................................$3,000 Variable cost per unit.....................................................................................................$2,100 Fixed costs......................................................................................................................$8,000,000
Question 3
You are starting a new project.This project would last 4years. The following is the input information that you have collected:
Buildinf cost(1.3% in the first year and 2.6% every year)....................................$12,000,000
Equipment cost (MACRS 5 years)........................................................................$8,000,000
Net operating working capital requirement(% of sales)...........................................10%
First year sales(in units)............................................................................................20,000
Growth rate in units sold.............................................................................................0%
Sales price per unit......................................................................................................$3,000
Variable cost per unit.....................................................................................................$2,100
Fixed costs......................................................................................................................$8,000,000
Market value of building at the end of year 4....................................................................7,500,000
Market value of equipment at the end of year 4.................................................................2,000,000
Tax rate................................................................................................................................40%
WACC...................................................................................................................................12%
Inflation growth in sales price per year..................................................................................2%
Inflation growth in VC per unit per year..................................................................................2%
Inflation growth in fixed costs per year....................................................................................1%
Prepare a details computation in determining the yearly
(in your calculation use zero decimal spaces/ round to the whole numbers).
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