Recalculate cash flow as shown from above table if variable costs are 83 percent of sales. Confirm that NPV will be - $788,000.

	Year 0	Years 1-12
Investment	- $5,400,000
Sales		$ 16,000,000
Variable costs		13,000,000
Fixed costs		2,000,000
Depreciation		450,000
Pre-tax profit (1 – 2 – 3 – 4)		550,000
Taxes (at 40%)		220,000
Profit after tax		330,000
Cash flow from operations (4 + 7)		780,000
Net cash flow	-$5,400,000	$ 780,000

Solutions

Expert Solution

EXCEL FORMULA:

Note: For calculating NPV discount rate is required.

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

calculate the NPV for the following: the project costs $50,000 upfront and cash flow is $13,000...

calculate the NPV for the following: the project costs $50,000 upfront and cash flow is $13,000 per year for the next six years. Use a 9% discount rate.

Based on the following information from Finco’s Financial statements, confirm that the Cash Flow Identity holds....

Based on the following information from Finco’s Financial statements, confirm that the Cash Flow Identity holds. Balance Sheet Current Accounts ◦ 2018: CA = 1500; CL = 1300 ◦ 2019: CA = 2000; CL = 1700 Fixed Assets ◦ 2018: NFA = 3000; 2019: NFA = 4000 LT Liabilities and Equity ◦ 2018: LTD = 2200; Common Equity = 500; RE = 500 ◦ 2019: LTD = 2800; Common Equity = 750; RE = 750 Income Statement ◦ EBIT =...

A proposed new investment has projected sales of $585,000. Variable costs are 44 percent of sales,...

A proposed new investment has projected sales of $585,000. Variable costs are 44 percent of sales, and fixed costs are $187,000; depreciation is $51,000. Prepare a pro forma income statement assuming a tax rate of 21 percent. What is the projected net income? (Input all amounts as positive values.) Sales Variable costs Fixed costs Depreciation EBT Taxes Net income

Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by...

Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this: A B C D 1 Chapter 5: Applying Excel 2 3 Data 4 Unit sales 24,000 units 5 Selling price per unit $10 per unit 6 Variable expenses per unit $5 per unit 7 Fixed expenses $90,000 8 (a) What is net operating income? (Negative amount should be indicated by a minus sign.) (b)...

An NPV profile plots a project's NPV at various costs of capital. A project's NPV profile is shown as follows.

An NPV profile plots a project's NPV at various costs of capital. A project's NPV profile is shown as follows. Identify the range of costs of capital that a firm would use to accept and reject this project. The point at which the NPV profile intersects the horizontal axis represents the _______ .

A project will generate $1 million net cash flow annually in perpetuity. If the project costs $7 million, what is the lowest WACC shown below that will make the NPV negative?

A project will generate $1 million net cash flow annually in perpetuity. If the project costs $7 million, what is the lowest WACC shown below that will make the NPV negative? A. 10% B. 12% C. 14% D. 16%

4. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet...

4. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this: Chapter 5: Applying Excel Data Unit sales 84,000 units Selling price per unit $10 per unit Variable expenses per unit $4 per unit Fixed expenses $210,000 (a) What is net operating income? (Negative amount should be indicated by a minus sign.) (b) By what percentage did the net operating income increase? Thad Morgan, a...

a. Using the information for the Seville Corporation above, calculation the cash flow from operating activities....

a. Using the information for the Seville Corporation above, calculation the cash flow from operating activities. b. Using the information for the Seville Corporation above, calculation the cash flow from investing activities. c. Using the information for the Seville Corporation above, calculation the cash flow from financing activities. Accounts payable increase 9,000 Accounts receivable increase 4,000 Accrued liabilities decrease 3,000 Amortization expenses 6,000 Cash balance Jan 1 22,000 Cash balance Dec 31 1,500 Cash...

Given the cash-flows in the table, what is the NPV of project A?

1. Project A Year Cash Flow 0 -$107 1 $69 2 $80 3 $120 WACC = 6.19% Given the cash-flows in the table, what is the NPV of project A? State your answer to the nearest penny. Give just the number with no dollar sign (e.g., 3.26) If the NPV is negative include the - sign (e.g. -4.28) 2. Using the information in the table, what is the IRR for Project A? Cash Flow Year Project A 0 ($175) 1...

The comparative cash flow statements from Sears and Wal-Mart are presented above. Amounts presented are in...

The comparative cash flow statements from Sears and Wal-Mart are presented above. Amounts presented are in millions. Review both statements considering what you've learned in this chapter about the cash flow statement. Answer the following questions: When analyzing a company's cash flow statement, which section of the statement (operating, investing or financing) do you believe is the best predictor of a company's future profitability? Why? Which company do you believe is healthier based on the cash flow statements presented? Provide...

Subjects