Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. you start a new 3 year bicycle manufacturing proje

You start a new 3 year bicycle manufacturing project using an initial investment of $450,000...

60.1K

Verified Solution

Question

Finance

You start a new 3 year bicycle manufacturing project using an initial investment of $450,000 to buy new equipment. Prior to launching your business, you paid $25,000 to a consultant who helped you put together a business proposal. Your business is able to sell 1,000 bicycles per year for a selling price of $2,500, variable cost of $1,200 per bicycle, and fixed costs per year of $350,000. Assume you depreciate your equipment straight-line over a 3 year period, anticipate inventory to go up $500 at year 0 (with full recovery at the end of the project), and have a corporate tax rate of 20.0%, all capital expenditure is spent at year 0 and you have a WACC of 8.8%. (Use spreadsheet to solve this problem)

What is the total cash outflow during year 0 -450500,-400000,-50000,-450000

Free cash flow of project during year 1 790,000, 700,000, 650,000, 810,000

NPV of the project 1,3 mil, 2,1 mil, 1,6 mil, 2 million

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Medical Sciences
1.2K views

Which of the following is true concerning the development of the nervous system after birth? a) the...

Biology
1.2K views

A good thesis statement should be which of the following A A question for your...

Physics
1.2K views

Two parallel metal plates having charges +Q and -Q face each other at a certain...

Physics
1.2K views

Assuming human pupil to have a radius of 0 25 cm and comfortable viewing distance...

Calculus
1.2K views

Let P x y be a point on the graph of y x a Express...

Algebra
1.2K views

K Let f x 3x 5 and g x 2x 7 Find f g x...

Accounting
1.2K views

Salsa Company is considering an investment in technology to improve its operations....

Accounting
1.2K views

Deep Mines Ld, of Saskatchewan is contemplating the...

Accounting
1.2K views

The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified...

Accounting
1.2K views

Many advocates of the International Public Sector Accounting Standards (IPSAS) have argued that it can...

Accounting
1.2K views

A firm has $3,060,000 in its common stock account and $30,600,000 in its paid in...

Accounting
1.2K views

1 19% 15:38 (50 points) For a $10.5 million cash and stock payment, Preston Company...