17. THE FINAL PROBLEM IS

17. THE FINAL PROBLEM IS

17. THE FINAL PROBLEM IS A CALCULATION PROBLEM with multiple partsCost of Land                                                               $ 200,000Cost of Buildings & Equipment                                 $ 350,000MACRS Class                                                                        20Life of Project (Years)                                                             5Terminal Value of Land                                              $ 300,000Terminal Value of Buildings & Equipment                $ 175,000First year sales (pounds)                                                 250,000Price per Pound                                                                   $3.50Unit Sales Growth Rate                                                      7.0%Variable Costs as % of Sales                                                62%Fixed Costs                                                                       75,000Tax Rate                                                                                 35%WACC                                                                                10.0%a. Prepare a statement of annual cash flows for years 0 through 5. Cash flows in year 0 are your expenses for building and land.Sales growth is based on the annual growth rate in units.Assume no changes in fixed or variable costs.Depreciate the project cost for 5 years, with the cash flow in year 5 to include the terminal cash flow of ending the investment.b. Calculate the NPV, profitability index, IRR, MIRR, payback and discounted payback of the cash flows in part 1.c. Using scenario manager find best case, worst case, base case of NPV based on sales in pounds, price per pound, and variable cost percent. Make sure to include scenario summary.

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