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NPV. Miglietti Restaurants is looking at a project with the following forecasted​ sales: ​ first-year sales...

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 using​ MACRS, and has a​ seven-year MACRS life classification. Fixed costs will be $330,000 per year. Miglietti Restaurants has a tax rate of 38​%. What is the operating cash flow for this project over these ten​ years? Find the NPV of the project for Miglietti Restaurants if the manufacturing equipment can be sold for ​$140,000 at the end of the​ ten-year project and the cost of capital for this project is 7​%.

1: What is the operating cash flow for this project for the first five years of the​ 10-year period??

2: for the last five years of the​ 10-year period?

3: What is the book value?

4: Calculate the gain or loss at disposal of the manufacturing equipment.

5: What is the after-tax cash flow at disposal?

6: What is the net present value?

MACRS Fixed Annual Expense Percentages by Recovery Class:         

  Year

​3-Year

​5-Year

​7-Year

​10-Year

    1

​33.33%

​20.00%

​14.29%

​10.00%

    2

​44.45%

​32.00%

​24.49%

​18.00%

    3

​14.81%

​19.20%

​17.49%

​14.40%

    4

​ 7.41%

​11.52%

​12.49%

​11.52%

    5

​11.52%

​8.93%

​9.22%

    6

​ 5.76%

​8.93%

​7.37%

    7

​8.93%

​6.55%

    8

​4.45%

​6.55%

    9

​6.55%

  10

​6.55%

  11

​3.28%

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