Maurice Tutor

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Teaching Since: May 2017
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  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Management Posted 05 May 2018 My Price 9.00

Production of the implants

PLEASE SOLVE IN EXCEL :)
SHOW ANSW AND FORMULA;)

 

Year Unit Sales 1 84,000 2 98,000 3 113,000 4 106,000 5 79,000

 

Production of the implants will require $1,500,000 in net working capital to start and additional net working capital investments each year equal to 15 percent of the projected sales increase for the following year. Total fixed costs are $3,400,000 per year, variable production costs are $265 per unit, and the units are priced at $395 each. The equipment needed to begin production has an installed cost of $17,000,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as seven-year MACRS property. In five years, this equipment can be sold for about 20 percent of its acquisition cost. AAI is in the 35 percent marginal tax bracket and has a required return on all its projects of 18 percent. Based on these preliminary project estimates, what is the NPV of the project? What is the IRR?

 

Help Me solve it... can you please provide the formulas and answer Thank You!!

 

                   
    Year 1 unit sales                   84,000            
    Year 2 unit sales                   98,000            
    Year 3 unit sales                 113,000            
    Year 4 unit sales                 106,000            
    Year 5 unit sales                   79,000            
    Initial NWC $          1,500,000            
    Additional NWC/year 15%            
    Fixed costs $          3,400,000            
    Variable cost per unit $                   265            
    Unit price $                   395            
    Equipment cost $        17,000,000            
    Salvage value (% of price) 20%            
    Tax rate 35%            
    Required return 18%            
    MACRS depreciation 14.29%            
      24.49%            
      17.49%            
      12.49%            
      8.93%            
                   
                   
    Output area:              
    Requirement:  
               
    Year 0 1 2 3 4 5  
    NWC $            
    Ending book value $            
                   
    Sales   $          
    Variable costs              
    Fixed costs              
    Depreciation              
    EBIT   $          
    Taxes              
    Net income   $          
    Depreciation              
    Operating cash flow   $             
                   
    Net cash flows              
    Operating cash flow $                        - $             
    Change in NWC              
    Capital spending                               -                            -                            -                            -    
    Total cash flow $               
    Cumulative cash flow $            
    Payback calculation              
    Net present value              
    Internal rate of return              
    Payback period    

Answers

Maurice Tutor
(5)
Status NEW Posted 05 May 2018 06:05 PM My Price 9.00

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