Initial investment outlay of $30 million, consisting of $25 million for equipment

Initial investment outlay of $30 million, consisting of $25 million for equipment

Question # 00268010 Posted By: solutionshere Updated on: 05/03/2016 11:02 AM Due on: 06/02/2016
Subject Business Topic General Business Tutorials:
Question
Dot Image
  • Initial investment outlay of $30 million, consisting of $25 million for equipment and $5 million for net working capital (NWC) (plastic substrate and ink inventory); NWC recoverable in terminal year
  • Project and equipment life: 5 years
  • Sales: $25 million per year for five years
  • Assume gross margin of 60% (exclusive of depreciation)
  • Depreciation: Straight-line for tax purposes
  • Selling, general, and administrative expenses: 10% of sales
  • Tax rate: 35%

    • You continue your conversation.

    “It looks good,” says Mary. “Use this information from Luke and James to compute the cash flows for the project.”

    “No problem,” you say.

    “Then, compute NPV and IRR of the project using the Excel spreadsheet I sent earlier today,” says Mary. “Use the IRR financial function for the computation of IRR.”

    “Okay,” you say. "I’ll submit my Excel file showing the computation of cash flows, NPV, and IRR by the end of week so you can look at it over the weekend.”

    Dot Image
    Report this Question as Inappropriate
    Tutorials for this Question
    1. solutionshere
      Tutorial # 00263251 Posted By: solutionshere Posted on: 05/03/2016 11:02 AM
      Puchased By: 3
      Tutorial Preview
      The solution of Initial investment outlay of $30 million, consisting of $25 million for equipment...
        Get the Solution
      Attachments
      27300111.xlsx (11.83 KB)
      Recent Feedback
      Rated By Feedback Comments Rated On
      Jr...63 Rating Trustworthy and best services ever 10/11/2016
      Get the Solution

    Great! We have found the solution of this question!

    Related Questions and Answers

    Whatsapp Lisa