You are evaluating a product for your company

Question # 00081899 Posted By: paul911 Updated on: 07/12/2015 08:19 AM Due on: 08/11/2015
Subject Economics Topic Financial Markets Tutorials:
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You are evaluating a product for your company. You estimate the sales price of product to be $160 per unit and sales volume to be 10,600 units in year 1; 25,600 units in year 2; and 5,600 units in year 3. The project has a 3 year life. Variable costs amount to $85 per unit and fixed costs are $206,000 per year. The project requires an initial investment of $342,000 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 $46,000. NWC requirements at the beginning of each year will be approximately 16% of the projected sales during the coming year. The tax rate is 30% and the required return on the project is 11%. What will the year 2 cash flows for this project be?
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  1. Tutorial # 00076566 Posted By: paul911 Posted on: 07/12/2015 08:19 AM
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    estimate the sales price of ...
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