Snow Inc. has just completed development of a new cellphone.The new product is expected to...
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Accounting
Snow Inc. has just completed development of a new cellphone.The new product is expected to produce annual revenues of P1,400,000.Producing the cellphone requires an investment in new equipment, costing, P1,500,000.The cellphone has a projected life cycle of 5 years.After 5 years, the equipment can be sold for P180,000.Working capital is also expected to increase by P200,000, which Snow will recover by the end of the new product's life cycle.Annual cash operating expenses are estimated at P820,000.The required rate of return is 8%.
Required:
1.Give schedule of the projected annual cash flows.
2.Calculate the NPV using Excel.
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