ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $807,300.00 work cell. Further, it will cost the firm $56,100.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $54,300.00. The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $7,000.00. Finally, the firm will invest $10,500.00 in net working capital to ensure the project has sufficient resources to be successful. The project will generate annual sales of $905,000.00 with expenses estimated at 38.00% of sales. Net working capital will be held constant throughout the project. The tax rate is 38.00%. The work cell is estimated to have a market value of $467,000.00 at the end of the fourth year. The firm expects to reclaim 90.00% of the final NWC position. The cost of capital is 15.00%. What is the terminal cash flow for the project? Submit Answer format: Currency: Round to: 2 decimal places.

ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $807,300.00 work cell. Further, it will cost the firm $56,100.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $54,300.00. The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $7,000.00. Finally, the firm will invest $10,500.00 in net working capital to ensure the project has sufficient resources to be successful. The project will generate annual sales of $905,000.00 with expenses estimated at 38.00% of sales. Net working capital will be held constant throughout the project. The tax rate is 38.00%. The work cell is estimated to have a market value of $467,000.00 at the end of the fourth year. The firm expects to reclaim 90.00% of the final NWC position. The cost of capital is 15.00%. What is the terminal cash flow for the project? Submit Answer format: Currency: Round to: 2 decimal places.

Name: 1 ABC Corporation has hired you to evaluate a new FOUR year project fo
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Description: 1 ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchaseof a $807,300.00 work cell. Further, it will cost the firm $56,100.00 to get the work cell delivered and installed. The workcell wi

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 4P

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