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Finance

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- We have a new project to launch a new product in our company, in next slides you have the estimated sales per unit, costs, etc. - The project has a 3 years life. - We will need to invest every year 17,430 in Fixed costs and we will need to invest additionally 90,000 euros as initial investment in new equipment that it will be depreciated 100% in three years. - Initial investment in Net working capital will be 20,000 . - See in next slides Projected capital requirement and changes in NWC - Calculate with all this information the Pro-forma Income statement and the Projected Cash Flows for the next three years. - Calculate the NPV for this project !!! - Would you accept this project? - Estimated sales 50,000 bottles - Sales Price per bottle $4.00 - Cost per bottle $2.50 - Estimated life 3 years - Fixed costs \$17,430/year - Initial equipment cost $90,000 - 100\% depreciated over 3 vear life - Investment in NWC $20,000 - Tax rate 21% - Cost of capital (WACC) 20% Proiected Canital Reauirements

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