Calculate the NPV and IRR: XYZ Inc. is analyzing a capital budgeting expansion project with the following cash low forecasts: 3-year project Unit sales = 1,500 per year Price = $50.00 Variable cost = $20.00 per unit Fixed cost = $5,000 per year FCInv= $60,000 Depreciated straight-line over three years to book value of zero NWCInv = $15,000 Salvage value at end of three years = $10,000 Marginal tax rate = 40% Cost of capital = 15%

Calculate the NPV and IRR: XYZ Inc. is analyzing a capital budgeting expansion project with the following cash low forecasts: 3-year project Unit sales = 1,500 per year Price = $50.00 Variable cost = $20.00 per unit Fixed cost = $5,000 per year FCInv= $60,000 Depreciated straight-line over three years to book value of zero NWCInv = $15,000 Salvage value at end of three years = $10,000 Marginal tax rate = 40% Cost of capital = 15%

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 2PA

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