Prepare a statement showing the incremental cash flows for this project over an 8-year period, business question
A manufacturing company is thinking of launching a new product. The company expects to sell $950,000 of the new product in the first year and $1,500,000 each year thereafter. Direct costs including labor and materials will be 45% of sales. Indirect incremental costs are estimated at $95,000 a year. The project requires a new plant that will cost a total of $1,500,000, which will be a depreciated straight line over the next 5 years. The new line will also require an additional net investment in inventory and receivables in the amount of $200,000.
Save your time - order a paper!
Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines
Order Paper NowAssignment Guidelines
- Using the information in the assignment description:
- Prepare a statement showing the incremental cash flows for this project over an 8-year period.
- Calculate the payback period (P/B) and the net present value (NPV) for the project.
- Answer the following questions based on your P/B and NPV calculations:
- Do you think the project should be accepted? Why?
- Assume the company has a P/B (payback) policy of not accepting projects with life of over 3 years.
- If the project required additional investment in land and building, how would this affect your decision? Explain.
If you need a sample I can give.
"Looking for a Similar Assignment? Order now and Get 15% Discount! Use Code "FIRST15"
