NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 34,000, with an annual growth rate of 4.00% over the next ten years. The sales price per unit will start at $43.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $2,200,000. It will be depreciated using MACRS, H, and has a seven-year MACRS life classification. Fixed costs will be $350,000 per year. Miglietti Restaurants has a tax rate of 38%. What is the operating cash flow for this project over these ten years? Find the NPV of the project for Miglietti Restaurants if the manufacturing equipment can be sold for $130,000 at the end of the ten-year project and the cost of capital for this project is 9%. What is the operating cash flow for this project in year 1? 1 Data Table (Round to the nearest dollar.) What is the operating cash flow for this project in year 2? MACRS Fixed Annual Expense Percentages by Recovery Class Click on this icon 9 to download the data from this table (Round to the nearest dollar.) What is the operating cash flow for this project in year 3? Year 3-Year 5-Year 7-Year 10-Year 1 33.33% 20.00% 14.29% 10.00% (Round to the nearest dollar.) 44.45% 32.00% 24.49% 18.00% 14.81% 19.20% 17.49% 14.40% What is the operating cash flow for this project in year 4? 4 7.41% 11.52% 12.49% 11.52% (Round to the nearest dollar.) 11.52% 8.93% 9.22% 5.76% 8.93% 7.37% What is the operating cash flow for this project in year 5? 7 8.93% 6.55% 8 4.45% 6.55% (Round to the nearest dollar.) 6.55% What is the operating cash flow for this project in year 6? 10 6.55% 11 3.28%

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Question 7

NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 34,000, with an annual growth rate of 4.00% over the
next ten years. The sales price per unit will start at $43.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales
price. The manufacturing equipment to aid this project will have a total cost (including installation) of $2,200,000. It will be depreciated using MACRS, E, and has a
seven-year MACRS life classification. Fixed costs will be $350,000 per year. Miglietti Restaurants has a tax rate of 38%. What is the operating cash flow for this
project over these ten years? Find the NPV of the project for Miglietti Restaurants if the manufacturing equipment can be sold for $130,000 at the end of the ten-year
project and the cost of capital for this project is 9%.
What is the operating cash flow for this project in year 1?
1 Data Table
(Round to the nearest dollar.)
What is the operating cash flow for this project in year 2?
MACRS Fixed Annual Expense Percentages by Recovery Class
Click on this icon 9 to download the data from this table
(Round to the nearest dollar.)
What is the operating cash flow for this project in year 3?
Year
3-Year
5-Year
7-Year
10-Year
1
33.33%
20.00%
14.29%
10.00%
$
(Round to the nearest dollar.)
44.45%
32.00%
24.49%
18.00%
3
14.81%
19.20%
17.49%
14.40%
What is the operating cash flow for this project in year 4?
4
7.41%
11.52%
12.49%
11.52%
$
(Round to the nearest dollar.)
11.52%
8.93%
9.22%
6
5.76%
8.93%
7.37%
What is the operating cash flow for this project in year 5?
7
8.93%
6.55%
$
(Round to the nearest dollar.)
8
4.45%
6.55%
9
6.55%
What is the operating cash flow for this project in year 6?
10
6.55%
11
3.28%
Transcribed Image Text:NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 34,000, with an annual growth rate of 4.00% over the next ten years. The sales price per unit will start at $43.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $2,200,000. It will be depreciated using MACRS, E, and has a seven-year MACRS life classification. Fixed costs will be $350,000 per year. Miglietti Restaurants has a tax rate of 38%. What is the operating cash flow for this project over these ten years? Find the NPV of the project for Miglietti Restaurants if the manufacturing equipment can be sold for $130,000 at the end of the ten-year project and the cost of capital for this project is 9%. What is the operating cash flow for this project in year 1? 1 Data Table (Round to the nearest dollar.) What is the operating cash flow for this project in year 2? MACRS Fixed Annual Expense Percentages by Recovery Class Click on this icon 9 to download the data from this table (Round to the nearest dollar.) What is the operating cash flow for this project in year 3? Year 3-Year 5-Year 7-Year 10-Year 1 33.33% 20.00% 14.29% 10.00% $ (Round to the nearest dollar.) 44.45% 32.00% 24.49% 18.00% 3 14.81% 19.20% 17.49% 14.40% What is the operating cash flow for this project in year 4? 4 7.41% 11.52% 12.49% 11.52% $ (Round to the nearest dollar.) 11.52% 8.93% 9.22% 6 5.76% 8.93% 7.37% What is the operating cash flow for this project in year 5? 7 8.93% 6.55% $ (Round to the nearest dollar.) 8 4.45% 6.55% 9 6.55% What is the operating cash flow for this project in year 6? 10 6.55% 11 3.28%
What is the operating cash flow for this project in year 7?
(Round to the nearest dollar.)
What is the operating cash flow for this project in year 8?
(Round to the nearest dollar.)
What is the operating cash flow for this project in year 9?
(Round to the nearest dollar.)
What is the operating cash flow for this project in year 10?
(Round to the nearest dollar.)
What is the after-tax cash flow of the project at disposal?
(Round to the nearest dollar.)
What is the NPV of the project?
%24
%24
Transcribed Image Text:What is the operating cash flow for this project in year 7? (Round to the nearest dollar.) What is the operating cash flow for this project in year 8? (Round to the nearest dollar.) What is the operating cash flow for this project in year 9? (Round to the nearest dollar.) What is the operating cash flow for this project in year 10? (Round to the nearest dollar.) What is the after-tax cash flow of the project at disposal? (Round to the nearest dollar.) What is the NPV of the project? %24 %24
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