NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 35,000, with an annual growth rate of 4.00% over the next ten years. The sales price per unit will start at $42.00 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 $2,400,000. It will be depreciated using MACRS,, and has a seven-year MACRS life classification. Fixed costs will be $360,000 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 $160,000 at the end of the ten-year project and the cost of capital for this project is 8%.
NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 35,000, with an annual growth rate of 4.00% over the next ten years. The sales price per unit will start at $42.00 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 $2,400,000. It will be depreciated using MACRS,, and has a seven-year MACRS life classification. Fixed costs will be $360,000 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 $160,000 at the end of the ten-year project and the cost of capital for this project is 8%.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
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Chapter11: Cash Flow Estimation And Risk Analysis
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![NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 35,000, with an annual growth rate of 4.00% over the next ten years. The sales price
per unit will start at $42.00 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 $2,400,000. It will be depreciated using MACRS,, and has a seven-year MACRS life classification. Fixed costs will be $360,000 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 $160,000 at the end of the ten-year project and the cost of capital for this project is 8%.
What is the operating cash flow for this project in year 1?
(Round to the nearest dollar.)
n example
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Data table
MACRS Fixed Annual Expense Percentages by Recovery Class
Click on this icon to download the data from this table
Year
1
2
3
4
5
6
789
10
11
3-Year
33.33%
44.45%
14.81%
7.41%
Print
5-Year
20.00%
32.00%
19.20%
11.52%
11.52%
5.76%
7-Year
14.29%
24.49%
17.49%
12.49%
8.93%
8.93%
8.93%
4.45%
Done
10-Year
10.00%
18.00%
14.40%
11.52%
9.22%
7.37%
6.55%
6.55%
6.55%
6.55%
3.28%
Clear all
X
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Transcribed Image Text:NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 35,000, with an annual growth rate of 4.00% over the next ten years. The sales price
per unit will start at $42.00 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 $2,400,000. It will be depreciated using MACRS,, and has a seven-year MACRS life classification. Fixed costs will be $360,000 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 $160,000 at the end of the ten-year project and the cost of capital for this project is 8%.
What is the operating cash flow for this project in year 1?
(Round to the nearest dollar.)
n example
Get more help.
Data table
MACRS Fixed Annual Expense Percentages by Recovery Class
Click on this icon to download the data from this table
Year
1
2
3
4
5
6
789
10
11
3-Year
33.33%
44.45%
14.81%
7.41%
Print
5-Year
20.00%
32.00%
19.20%
11.52%
11.52%
5.76%
7-Year
14.29%
24.49%
17.49%
12.49%
8.93%
8.93%
8.93%
4.45%
Done
10-Year
10.00%
18.00%
14.40%
11.52%
9.22%
7.37%
6.55%
6.55%
6.55%
6.55%
3.28%
Clear all
X
Check answer
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