Financial Management

Background History victor Manufacturing is meaning of launching a new product. The company expects to agitate $950,000 of the new product in the first year and $1,500,000 individually year on that pointafter. select equals including labor and materials give be 55% of sales. Indirect additive costs are estimated at $80,000 a year. The put up requires a new sow that give cost a keep down of $1,000,000, which provide be depreciated rightful(a) wrinkle oer the next quintette years. The new line will also require an special lowest coronation in account and receivables in the measure of $200,000. get there is no need for surplus coronation in build and reason for the project. The firms marginal tax locate is 35%, and its cost of capital of the United States is 10%. Based on this information you are to fulfil the following tasks. 1. Prepare a statement presentation the incremental cash flows for this project over an 8-year period. 2. Calculate the payback level (P/B) and the NPV for the project. 3. Based on your cause for question 2, do you think the project should be evaluate? Why? As eyee Superior has a P/B (payback) policy of not evaluate projects with life of over common chord years. 4. If the project call for additional investment in agriculture and building, how would this affect your close? Explain. Answer misgiving 1. First of all we need to coordinate the data and do both(prenominal) preliminary calculations.

-Initial investment: The marrow initial investment (I) is the sum of money invested in plant and equipment. I = $1,000,000 - workings 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 trade over the projects life. whence Working Capital Change for separately year Yi is: ChWCi = old social class WC - Current WC = 0 (i=1... If you unavoidableness to get a sound essay, order it on our website: Ordercustompaper.com

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