Vernon-Nelson Chemicals is planning to release a new brand of insecticide, Bee-Safe, that will kill many...

Vernon-Nelson Chemicals is planning to release a new brand of insecticide, Bee-Safe, that will kill many insect pests but not harm useful pollinators. Buying new equipment to manufacture the product will cost $25 million, and there will be an additional $5 million cost to reconfigure existing plant. The equipment is expected to have a lifetime of ten years and will be depreciated by the straight-line method over its lifetime. The $5 million building modification will be depreciated straight-line over 20 years. The firm expects that they should be able to sell 2,000,000 gallons per year at a price of $60 per gallon. It will take $36 per gallon to manufacture and support the product. If Vernon-Nelson's marginal tax rate is 40%, what are the FCF (free cash flows) in year 3 of this project?

$27.2 million
$16.2 million
$23.8 million
$29.9 million
$45.3 million

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jeff jeffy answered 1 year ago

Williamson is planning to set up a new brand called Exotic. As the brand concept is...

Williamson is planning to set up a new brand called Exotic. As the brand concept is not yet fully clear, there is also an open question in how to set up the supply chain. Currently it is known that there will be now cold chain required. In addition there is a push by management to set up a product concept that has a high shelve live. Some competitors are not only bringing other products into the market, they were also...

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Vernon-Nelson Chemicals is planning to release a new brand of insecticide, Bee-Safe, that will kill many...

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Williamson is planning to set up a new brand called Exotic. As the brand concept is...