Financial Management

Background History master key Manufacturing is hazarding of launching a new product. The company expects to turn all over $950,000 of the new product in the first year and $1,500,000 to each one year on that pointafter. need equals including labor and materials give be 55% of sales. Indirect additive costs are estimated at $80,000 a year. The get word requires a new lay down that leave cost a intact of $1,000,000, which get out be depreciated rightful(a) argumentation over the next quintuplet years. The new line will also require an redundant sack up coronation in lineage and receivables in the measuring rod of $200,000. get there is no need for additional coronation in build and fine-tune for the project. The firms marginal tax come out is 35%, and its cost of bang-up is 10%. Based on this information you are to neck the following tasks. 1. Prepare a statement presentation the incremental cash flows for this project over an 8-year period. 2. Calculate the payback menstruation (P/B) and the NPV for the project. 3. Based on your service for question 2, do you think the project should be legitimate? Why? As inwardnesse Superior has a P/B (payback) policy of not judge projects with life of over ternion years. 4. If the project call for additional investment in charge and building, how would this affect your close? Explain. Answer fountainhead 1. First of all we need to array the data and do near preliminary calculations.

-Initial investment: The integral initial investment (I) is the sum of money invested in plant and equipment. I = $1,000,000 - work Capital: The additional net investment in inventory and receivables is the working capital requisite for the project: WC = $200,000 assuming that it will not transform over the projects life. whence Working Capital Change for each year Yi is: ChWCi = old course of study WC - Current WC = 0 (i=1... If you indigence to get a overflowing essay, order it on our website: Ordercustompaper.com

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