Swindler Ltd has completed a feasibility study costing $22652 to determine if there is any benefit...

Swindler Ltd has completed a feasibility study costing $22652 to determine if there is any benefit in purchasing a new asset. The machine will cost $298115 and an additional $21316 will need to spent to have the machine in operational state. Before the machine can be used staff must be trained at a further cost of $6239. The project is expected to last for 5 years and the Taxation Office has confirmed this. At the end of the project the machine will be fully depreciated. Initial advertising costs are expected to $30780 and additional stock of $6779 will be needed. Wages will change from $89319 to $63422 and Fixed Costs will remain at $59436. The new machine is expected to produce sales of $1861932 in the first year and will grow by 12% each year of the project. Material costs will be 29% of sales in each year. You are required to calculate the net cash flow (round to the nearest dollar and DO NOT include $ sign) that would appear in Year 0 of a Capital Budget.

Assume the Australian Company tax Rate applies

Expert Solution

Cash flow related to buying new machine:

jeff jeffy answered 1 year ago

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