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You are evaluating a product for your company

Question # 00081899
Subject: Economics
Due on: 08/11/2015
Posted On: 07/12/2015 08:19 AM

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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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Tutorial Preview …estimate xxx sales xxxxx of product xx be $160 xxx unit xxx xxxxx volume xx be 10,600 xxxxx in year xx 25,600 xxxxx xx year xx and 5,600 xxxxx…
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