Question

In: Finance

Details Yrs. 1 2 3 4 5 6 7 8 Sales (units) 3000 5000 6000 6500...

Details

Yrs. 1

2

3

4

5

6

7

8

Sales (units)

3000

5000

6000

6500

6000

5000

4000

3000

Fixed Costs

25000

25000

25000

25000

25000

25000

25000

25000

Annual Depreciation

114320

195920

139920

99920

71440

71440

71440

35600

1. Project X is being appraised and has the following details:

The following information is also available:

  1. Unit selling price is expected to be $120 for the first 3 years then fall to $110 thereafter.

  2. Unit variable costs will remain constant at $60/unit throughout the project life

  3. The project required initial outlay of $800 000

  4. The firms marginal tax rate is 34% and the required rate of return is 15%

Required:

  1. Calculate the projects operating cash flows.

  2. What is the project’s NPV.

  3. Is the project acceptable or not why?

What are the factors that influence a firms dividend policy

Solutions

Expert Solution

Detailed answer is provided in the hand written notes below.

jeff jeffy answered 3 years ago
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