Question
In: Finance
Waste Management Inc. is analyzing an average-risk project, and the following data have been developed. Unit...
Waste Management Inc. is analyzing an average-risk project, and the following data have been developed. Unit sales will be constant, but the sales price will increase with inflation. Fixed costs will also be constant, but variable costs will rise with inflation. The project should last for 3 years, and there will be no salvage value. This is just one project for the firm, so any losses can be used to offset gains on other firm projects. What is the project's expected NPV? IRR? Would you accept this project?
WACC
9.50%
Net investment cost (depreciable basis)
$100,000
Units sold
40,000
Average price per unit, Year 1
$25.00
Fixed op. cost excl. depr'n (constant)
$150,000
Variable op. cost/unit, Year 1
$20.20
Annual depreciation rate
33.33%
Expected inflation
5.00%
Tax rate
40.0%
Please show work.
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Desai Industries is analyzing an average risk project, and the following data have been developed Unit...
Desai Industries is analyzing an average risk project, and the
following data have been developed Unit sales will be constant, but
the sales price should increase with inflation. Fixed costs will
also beconstant, but variable costs should rise with inflation. The
project should last for 3 years, it will bedepreciated on a
straight line basis, and there will be no salvage value. This is
just one of many projectsfor the firm, so any losses can be used to
offset gains...
Poulsen Industries is analyzing an average-risk project, and the following data have been developed. Unit sales...
Poulsen Industries is analyzing an average-risk project, and the
following data have been developed. Unit sales will be constant,
but the sales price should increase with inflation. Fixed costs
will also be constant, but variable costs should rise with
inflation. The project should last for 3 years, it will be
depreciated on a straight-line basis, and there will be no salvage
value. No change in net operating working capital wouThis is just
one of many projects for the firm, so...
Poulsen Industries is analyzing an average-risk project, and the following data have been developed. Unit sales...
Poulsen Industries is analyzing an average-risk project, and the
following data have been developed. Unit sales will be constant,
but the sales price should increase with inflation. Fixed costs
will also be constant, but variable costs should rise with
inflation. The project should last for 3 years. Under the new tax
law, the equipment for the project is eligible for 100% bonus
depreciation, so it will be fully depreciated at t = 0. At the end
of the project’s life,...
Poulsen Industries is analyzing an average-risk project, and the following data have been developed. Unit sales...
Poulsen Industries is analyzing an average-risk project, and the
following data have been developed. Unit sales will be constant,
but the sales price should increase with inflation. Fixed costs
will also be constant, but variable costs should rise with
inflation. The project should last for 3 years. Under the new tax
law, the equipment for the project is eligible for 100% bonus
depreciation, so it will be fully depreciated at t = 0. At the end
of the project’s life,...
Poulsen Industries is analyzing an average-risk project, and the following data have been developed. Unit sales...
Poulsen Industries is analyzing an average-risk project, and the
following data have been developed. Unit sales will be constant,
but the sales price should increase with inflation. Fixed costs
will also be constant, but variable costs should rise with
inflation. The project should last for 3 years, it will be
depreciated on a straight-line basis, and there will be no salvage
value. No change in net operating working capital would be
required. This is just one of many projects for...
Shultz Business Systems is analyzing an average-risk project, and the following data have been developed. Unit...
Shultz Business Systems is analyzing an average-risk project,
and the following data have been developed. Unit sales will be
constant, but the sales price should increase with inflation. Fixed
costs will also be constant, but variable costs should rise with
inflation. The project should last for 3 years, it will be
depreciated on a straight-line basis, and there will be no salvage
value. This is just one of many projects for the firm, so any
losses can be used to...
Shultz Business Systems is analyzing an average-risk project, and the following data have been developed. Unit...
Shultz Business Systems is analyzing an average-risk project,
and the following data have been developed. Unit sales will be
constant, but the sales price should increase with inflation. Fixed
costs will also be constant, but variable costs should rise with
inflation. The project should last for 3 years, it will be
depreciated on a straight-line basis, and there will be no salvage
value. This is just one of many projects for the firm, so any
losses can be used to...
Poulsen Industries is analyzing an average-risk project, and the following data have been developed. Unit sales...
Poulsen Industries is analyzing an average-risk project, and the
following data have been developed. Unit sales will be constant,
but the sales price should increase with inflation. Fixed costs
will also be constant, but variable costs should rise with
inflation. The project should last for 3 years, it will be
depreciated on a straight-line basis, and there will be no salvage
value. No change in net operating working capital would be
required. This is just one of many projects for...
Desai Industries is analyzing an average-risk project, and the following data have been developed. Unit sales...
Desai Industries is analyzing an average-risk project, and the
following data have been developed. Unit sales will be constant,
but the sales price should increase with inflation. Fixed costs
will also be constant, but variable costs should rise with
inflation. The project should last for 3 years, it will be
depreciated on a straight-line basis, and there will be no salvage
value. No change in net operating working capital would be
required. This is just one of many projects for...
Poulsen Industries is analyzing an average-risk project, and the following data have been developed. Unit sales...
Poulsen Industries is analyzing an average-risk project, and the
following data have been developed. Unit sales will be constant,
but the sales price should increase with inflation. Fixed costs
will also be constant, but variable costs should rise with
inflation. The project should last for 3 years, it will be
depreciated on a straight-line basis, and there will be no salvage
value. No change in net operating working capital would be
required. This is just one of many projects for...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Kelson Sporting Equipment, Inc., makes two different types of baseball gloves: a regular model and a...
- Write in Python and as 2 seperate programs Write a program that allows the user to...
- Asymptotic Notation. (a) [10 pts.] Prove that n3 −91n2 −7n−14 = Ω(n3). Your answer must clearly...
- Prepare ONE Page reflection to the readings of the Perceptual Process incorporating as well one outside...
- How is the internet affecting our everyday life? I just need a rough draft for this...
- Please explain your view of the most difficult aspect of Customs Compliance?
- You are required to write an interactive program that prompts the user for seven (7) real...
ADVERTISEMENT