Question

NPV. Miglietti Restaurants is looking at a project with the following forecasted​ sales: ​ first-year sales quantity of 36,000​, with an annual growth rate of 4.00​% over the next ten years. The sales price per unit will start at $43.00 and will grow at 2.00% per year. The production costs are expected to be 55​% of the current​ year's sales price. The manufacturing equipment to aid this project will have a total cost​ (including installation) of $2,400,000. It will be depreciated using​ MACRS, and has a​ seven-year MACRS life classification. Fixed costs will be ​$330,000 per year. Miglietti Restaurants has a tax rate of 38​%.

What is the operating cash flow for this project over these ten​ years? Find the NPV of the project for Miglietti Restaurants if the manufacturing equipment can be sold for​ $130,000 at the end of the​ ten-year project and the cost of capital for this project is 8​%.

Please list operating cash flow for all ten years and answer NPV question

Answer 1

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