Question

describe a potential capital expenditure project from the industry in which you now work or an...

describe a potential capital expenditure project from the industry in which you now work or an industry in which you are interested. What is the project? Describe and provide an approximate value of the initial cash flow. Describe and provide an approximate value of the annual cash flow. Provide an estimation of the life of the project, as well as the exit costs.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The sweet jam manufacturing company considers providing the jam in small packets to the customers to increase its sales. New packaging machinery is required which costs $400000. The company thinks to sell each small pack for $15 having weight 100 grams. The company expects to sell 150000 each year. The cash flow would be $15* 150000 = $2250000. The company estimates the life of machinery to be 10 years. The company estimates the variable cost to be $7 per pack and $100000 as the annual fixed costs. The depreciation is $40000 per year.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider a capital expenditure project that has forecasted revenues equal to $32,000 per year; cash expenses...
Consider a capital expenditure project that has forecasted revenues equal to $32,000 per year; cash expenses are estimated to be $29,000 per year. The cost of the project equipment is $23,000, and the equipment’s estimated salvage value at the end of the project is $9,000. The equipment’s $23,000 cost will be depreciated on a straight-line basis to $0 over a 10-year estimated economic life. Assume that the project requires an initial $7,000 working capital investment. The company’s marginal tax rate...
You are a project manager. You are estimating the cash flows of a potential project that...
You are a project manager. You are estimating the cash flows of a potential project that requires an investment of $200,000, including installation cost, and $30,000 in working capital, which will be fully recaptured at the end of the project. The machine has an estimated life of six years and will be depreciated via the simplified straight-line method. The project is expected to raise the firm’s annual revenues by $330,000 and increase annual costs by $125,000. The machine you purchase...
You are a project manager. You are estimating the cash flows of a potential project that...
You are a project manager. You are estimating the cash flows of a potential project that requires an investment of $200,000, including installation cost, and $30,000 in working capital, which will be fully recaptured at the end of the project. The machine has an estimated life of six years and will be depreciated via the simplified straight-line method. The project is expected to raise the firm’s annual revenues by $330,000 and increase annual costs by $125,000. The machine you purchase...
A rm is considering an investment project with the following information: Initial capital expenditure $36 million...
A rm is considering an investment project with the following information: Initial capital expenditure $36 million Annual sales (in units) 2 million units Selling price per unit $20 Cost per unit $10 Project life 3 years Depreciation Straight line, over the life of the project Working capital Initially (Year 0) the project requires an increase in net working capital of $6 million, but it will be recovered after the project's life (Year 3). Tax rate 20% WACC 15% (a) What...
You are a project manager. You are estimating cash flows of a potential project that requires...
You are a project manager. You are estimating cash flows of a potential project that requires investment of 400,000in a machine, including installation cost, and $60,000 in working capital which will be fully captures at the end of the project. The machine has the estimated life of 7 years and will be depreciated vie simplified straight-line method. The project is expected to raise the firm's revenues by $330,000 and costs by $125,000 annually. the machine you purchase for the project...
You are a project manager. You are estimating cash flows of a potential project that requires...
You are a project manager. You are estimating cash flows of a potential project that requires investment of $250,000 in a machine, including installation cost, and $40,000 in working capital which will be fully captures at the end of the project. The machine has the estimated life of 5 years and will be depreciated vie simplified straight-line method. The project is expected to raise the firm's revenues by $330,000 and costs by $125,000 annually. Since the trend of the product...
BAM Co. is evaluating a project requiring a capital expenditure of $806,250. The project has an...
BAM Co. is evaluating a project requiring a capital expenditure of $806,250. The project has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows: Year Net Income Net Cash Flow 1 $ 75,000 $285,000 2 102,000 290,000 3 109,500 190,000 4     36,000   125,000 $322,500 $890,000 The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for...
Cash Flow Estimation: Example 1: You are considering expanding your product line. You feel you can...
Cash Flow Estimation: Example 1: You are considering expanding your product line. You feel you can sell 100,000 of these products per year for 4 years (after which time this project is expected to shut down). The product will sell for $6 each, with variable costs of $3 for each one produced, while annual fixed costs associated with production will be $90,000. In addition, there will be a $200,000 initial expenditure associated with the purchase of new production equipment. It...
Williams Company is evaluating a project requiring a capital expenditure of $480,000. The project has an...
Williams Company is evaluating a project requiring a capital expenditure of $480,000. The project has an estimated life of 4 years and salvage value at the end of years 4 is $20,000. The estimated net income and net cash flow from the project are as follows: Year Net Income Net Cash Flow 1 $90,000 $210,000 2 $80,000 $200,000 3 $60,000 $160,000 4 $30,000 $150,000 $260,000 $720,000 The companys minimum desired rate of return(hurdle rate) for the net present value analysis...
Consider an eight-year project which has an initial capital expenditure of $1,000,000 (after tax calculation and...
Consider an eight-year project which has an initial capital expenditure of $1,000,000 (after tax calculation and non-depreciable), annual income of $300,000 beginning at the end of year 1, and annual operating costs of $80,000 beginning at the end of year 1. Assume incomes increase at the rate of 7% whereas costs increase at the rate of 5%. Also assume tax rate to be 30% of taxable income. a) Calculate the net cash flows of this project in actual dollar b)...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT