In: Finance

**With the data below, calculate NPV for the following
Project**

Project life is 5 year

Sales forecasting for yr1 is $485,000

follow by sales Growth rate of 15.650%, 13.85%, 12.50% & 10.90%

COGS as % of annual sales is 63.15

cap invest $275,000 to be depreciated over 6year

Salvage value $81,000

Beg NWC $8900

NWC as % of Sales 1.05%

WACC 10.23%

Tax rate 35.40%

The Firm could rent out the property for $1950/yr if they decide to not go forward with the project

Calculation of NPV | |||||

Particulars | Year1 | Year2 | Year3 | Year4 | Year5 |

Sales | 485000 | 560903 | 638587 | 718411 | 796718 |

Less | |||||

Cost of Goods Sold | 306278 | 354210 | 403268 | 453677 | 503127 |

Net Working Capital | |||||

Opening | 8900 | 5093 | 5889 | 6705 | 7543 |

Closing | 5093 | 5889 | 6705 | 7543 | 8366 |

Change | 3808 | -797 | -816 | -838 | -822 |

Depreciation | 45833 | 45833 | 45833 | 45833 | 45833 |

EBIT | 129082 | 161656 | 190302 | 219739 | 248579 |

Less [email protected]% | 45695 | 57226 | 67367 | 77788 | 87997 |

EAT | 83387 | 104430 | 122935 | 141952 | 160582 |

Add Depreciation | 45833 | 45833 | 45833 | 45833 | 45833 |

Operating Cash Flows | 129220 | 150263 | 168768 | 187785 | 206415 |

Salvage Value excluding taxes | 51516 | ||||

Total Cash Flows | 129220 | 150263 | 168768 | 187785 | 257931 |

Discounting [email protected]% | 0.9072 | 0.8230 | 0.7466 | 0.6773 | 0.6145 |

Discounted Cash Flows | 117227 | 123667 | 126006 | 127192 | 158491 |

Total Discounted Cash Inflows | 652583 | ||||

Less Cash Outflows | 275000 | ||||

NPV | 377583 |

Renting of Property | Year1 | Year2 | Year3 | Year4 | Year5 |

Income | 1950 | 1950 | 1950 | 1950 | 1950 |

Discounting [email protected]% | 0.9072 | 0.8230 | 0.7466 | 0.6773 | 0.6145 |

Discounted Cash Flows | 1769 | 1605 | 1456 | 1321 | 1198 |

Total Cash flows | 7349 |

Since NPV of the project is higher than renting the project can be proceeded

NPV. Miglietti Restaurants is looking at a project with the
following forecasted sales: first-year sales quantity of
36,000, with an annual growth rate of 4.00% over the next ten
years. The sales price per unit will start at $45.00 and will grow
at 2.00% per year. The production costs are expected to be 55% of
the current year's sales price. The manufacturing equipment to aid
this project will have a total cost (including installation) of
$2,400,000. It will be...

NPV. Miglietti Restaurants is looking at a project with the
following forecasted sales: first-year sales quantity of
33,000, with an annual growth rate of 4.00% over the next ten
years. The sales price per unit will start at $43.00 and will grow
at 2.00% per year. The production costs are expected to be 55% of
the current year's sales price. The manufacturing equipment to aid
this project will have a total cost (including installation) of
$2,300,000. It will be...

NPV. Miglietti Restaurants is looking at a project with the
following forecasted sales: first-year sales quantity of
31,000, with an annual growth rate of 4.00% over the next ten
years. The sales price per unit will start at $43.00 and will grow
at 2.00 % per year. The production costs are expected to be 55% of
the current year's sales price. The manufacturing equipment to aid
this project will have a total cost (including installation) of
$2,400,000. It will...

NPV. Miglietti Restaurants is looking at a project with the
following forecasted sales: first-year sales quantity of
32,000, with an annual growth rate of 4.00% over the next ten
years. The sales price per unit will start at $42.00 and will grow
at 2.00% per year. The production costs are expected to be 55% of
the current year's sales price. The manufacturing equipment to aid
this project will have a total cost (including installation) of
$2,200,000. It will be...

NPV. Miglietti Restaurants is looking at a project with the
following forecasted sales: first-year sales quantity of
33,000,with an annual growth rate of 4.00% over the next ten
years. The sales price per unit will start at $44.00 and will grow
at 2.00% per year. The production costs are expected to be 55% of
the current year's sales price. The manufacturing equipment to aid
this project will have a total cost (including installation) of
$2,200,000. It will be depreciated...

NPV. Miglietti Restaurants is looking at a project with the
following forecasted sales: first-year sales quantity of 30
comma 000, with an annual growth rate of 4.00% over the next ten
years. The sales price per unit will start at $44.00 and will grow
at 2.00 % per year. The production costs are expected to be 55% of
the current year's sales price. The manufacturing equipment to aid
this project will have a total cost (including installation) of
$2...

Below is the data for the spreadsheet for a project selection
model:
Project
NPV (return) cash investment
personnel requirements
1
75,000
30,000
10
2
50,000
45,000
5
3
25,000
75,000
10
4
85,000
30,000
4
5
50,000
45,000
8
6
25,000
75,000
7
7
95,000
45,000
6
8
25,000
60,000
1
9
75,000
30,000
2
10
65,000
45,000
2
You have $250,000 to invest and 36 people. Maximize NPV by
approving/rejecting projects.
Multiple Choice #8: How many projects of the...

Calculate the NPV of a 20-year project with a cost of $300,000
and annual cash flows of $25,000 in years 1-10 and $50,000 in years
11-20. The company's required rate of return is 10%

Calculate NPV for each project. Please workout problem..
Discount rate
10%
Year
Project A
Project B
Project C
2018
($3,000,000)
($3,000,000)
($3,200,000)
2019
$0
$975,000
$985,000.00
2020
$600,000
$975,000
$925,000.00
2021
$900,000
$975,000
$1,000,000.00
2022
$3,000,000
$1,000,000
$950,000.00

Calculate the NPV for Project A and accept or reject the project
with the cash flows shown below if the appropriate cost of capital
is 7%
Project A
Time 0 1 2 3 4 5
Cash Flow -990 350 480 500 630 120
2) Calculate the NPV for project L and recommend whether the
company should accept or reject the project. Cost of Capital is
6%
Project L
Time 0 1 2 3 4 5
Cash Flow - 8,600
...

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