In: Finance
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:
Unit selling price is expected to be $120 for the first 3 years then fall to $110 thereafter.
Unit variable costs will remain constant at $60/unit throughout the project life
The project required initial outlay of $800 000
The firms marginal tax rate is 34% and the required rate of return is 15%
Required:
Calculate the projects operating cash flows.
What is the project’s NPV.
Is the project acceptable or not why?
What are the factors that influence a firms dividend policy