ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $815,500.00 work cell. Further, it will cost the firm $58,600.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $62,800.00. The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $6,300.00. Finally, the firm will invest $10,300.00 in net working capital to ensure the project has sufficient resources to be successful. The project will generate annual sales of $921,000.00 with expenses estimated at 38.00% of sales. Net working capital will be held constant throughout the project. The tax rate is 38.00%. The work cell is estimated to have a market value of $489,000.00 at the end of the fourth year. The firm expects to reclaim 84.00% of the final NWC position. The cost of capital is al is 11.00%. What is the cash flow to start the project in year 07 Submit Answer format: Currency: Round to: 2 decimal places. Show Hint

ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $815,500.00 work cell. Further, it will cost the firm $58,600.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $62,800.00. The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $6,300.00. Finally, the firm will invest $10,300.00 in net working capital to ensure the project has sufficient resources to be successful. The project will generate annual sales of $921,000.00 with expenses estimated at 38.00% of sales. Net working capital will be held constant throughout the project. The tax rate is 38.00%. The work cell is estimated to have a market value of $489,000.00 at the end of the fourth year. The firm expects to reclaim 84.00% of the final NWC position. The cost of capital is al is 11.00%. What is the cash flow to start the project in year 07 Submit Answer format: Currency: Round to: 2 decimal places. Show Hint

Name: 1 ABC Corporation has hired you to evaluate a new FOUR year project fo
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Description: 1 ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchaseof a $815,500.00 work cell. Further, it will cost the firm $58,600.00 to get the work cell delivered and installed. The workcell wi

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 4P

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