Question
In: Finance
Margarite's Enterprises is considering a new project. The project will require $325,000 for new fixed assets,...
Margarite's Enterprises is considering a new project. The project will require $325,000 for new fixed assets, S160,000 for additional inventory and $ 35,000 for additional accounts receivable. Short term debt is expected to increase by $ 100,000 and long- term debt is expected to increase by $ 300,000. The project has a 5- year life. The fixed assets will be depreciated straight-line io a zero book value over the life of the project . At the end of the project , the fixed assets can be sold for 25% of their original cost. The net working capital returns to its original level at the end of the project . The project is expected to generate annual sales of $ 554,000 and costs of $ 430,000 . The tax rate is 35 % and the required rate of return is 15%.
A- What is the amount of the after-tax cash flow from the sale of the fixed assets at the end of this project?
B- What is the cash flow recovery from net working capital at the end of this project?
C- What is the annual OCF?
can you explain without excel specially C
Solutions
jeff jeffy answered 2 days agoRelated Solutions
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Tech Enterprises is considering a new project that will require $325,000 for fixed assets, $160,000 for...
Tech Enterprises is considering a new project that will require
$325,000 for fixed assets, $160,000 for inventory, and $35,000 for
accounts receivable. Short-term debt is expected to increase by
$100,000. The project has a life of 5 years. The fixed assets will
be depreciated straight-line to a zero book value over the life of
the project. Ignore bonus depreciation. At the end of the project,
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inventory and accounts receivable (working capital). The project
has a 5-year life. The fixed assets belong to a 30% CCA class. At
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for 4 percent of their original cost. The net working capital
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