Homework Help is Here – Start Your Trial Now!
Business
Finance
the termination cash flow (everything except the operational cash flow) at the end of year 5

the termination cash flow (everything except the operational cash flow) at the end of year 5

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
See similar textbooks
icon
Related questions
Question

What is the termination cash flow (everything except the operational cash flow) at the end of year 5?

**Project Information for Cheese & Cake Factory:** Cheese & Cake Factory is evaluating a project with the following forecasted sales details: - **First-Year Sales Quantity:** 35,000 units - **Annual Growth Rate:** 5% over the next 5 years - **Sales Price per Unit:** $40, with a 3% growth per year - **Production Costs:** 50% of the current year's sales price **Manufacturing Equipment Details:** - **Total Cost (Including Installation):** $1,000,000 - **Depreciation Method:** MACRS with a seven-year life classification - **Fixed Costs:** $300,000 per year **Financial Details:** - **Change in Net Operating Working Capital:** $10,000, recoverable at the end of year 5 - **Tax Rate:** 40% - **End of Year 5 Equipment Resale Value:** $150,000 - **Cost of Capital for the Project:** 10% This information is intended to address and analyze the next three questions regarding the project.
Transcribed Image Text:**Project Information for Cheese & Cake Factory:** Cheese & Cake Factory is evaluating a project with the following forecasted sales details: - **First-Year Sales Quantity:** 35,000 units - **Annual Growth Rate:** 5% over the next 5 years - **Sales Price per Unit:** $40, with a 3% growth per year - **Production Costs:** 50% of the current year's sales price **Manufacturing Equipment Details:** - **Total Cost (Including Installation):** $1,000,000 - **Depreciation Method:** MACRS with a seven-year life classification - **Fixed Costs:** $300,000 per year **Financial Details:** - **Change in Net Operating Working Capital:** $10,000, recoverable at the end of year 5 - **Tax Rate:** 40% - **End of Year 5 Equipment Resale Value:** $150,000 - **Cost of Capital for the Project:** 10% This information is intended to address and analyze the next three questions regarding the project.
# MARCS Fixed Annual Expense Percentages by Recovery Class This table details the Modified Accelerated Cost Recovery System (MARCS) fixed annual expense percentages for different recovery classes over various time periods ranging from 3 to 20 years. | Year | 3-years | 5-years | 7-years | 10-years | 15-years | 20-years | |------|---------|---------|---------|----------|----------|----------| | 1 | 33.33% | 20.00% | 14.29% | 10.00% | 5.00% | 3.750% | | 2 | 44.45% | 32.00% | 24.49% | 18.00% | 9.50% | 7.219% | | 3 | 14.81% | 19.20% | 17.49% | 14.40% | 8.55% | 6.677% | | 4 | 7.41% | 11.52% | 12.49% | 11.52% | 7.70% | 6.177% | | 5 | | 11.52% | 8.93% | 9.22% | 6.93% | 5.713% | | 6 | | 5.76% | 8.92% | 7.37% | 6.23% | 5.285% | | 7 | | 8.93% | 6.55% | 6.55% | 5.90% | 4.888% | | 8 | | 4.46% | 6.55% | 6.55% | 5.90% | 4.522% | | 9 | | | 6.56% | 6.56% | 5.91% | 4.462% | | 10 | | | 6.55% |
Transcribed Image Text:# MARCS Fixed Annual Expense Percentages by Recovery Class This table details the Modified Accelerated Cost Recovery System (MARCS) fixed annual expense percentages for different recovery classes over various time periods ranging from 3 to 20 years. | Year | 3-years | 5-years | 7-years | 10-years | 15-years | 20-years | |------|---------|---------|---------|----------|----------|----------| | 1 | 33.33% | 20.00% | 14.29% | 10.00% | 5.00% | 3.750% | | 2 | 44.45% | 32.00% | 24.49% | 18.00% | 9.50% | 7.219% | | 3 | 14.81% | 19.20% | 17.49% | 14.40% | 8.55% | 6.677% | | 4 | 7.41% | 11.52% | 12.49% | 11.52% | 7.70% | 6.177% | | 5 | | 11.52% | 8.93% | 9.22% | 6.93% | 5.713% | | 6 | | 5.76% | 8.92% | 7.37% | 6.23% | 5.285% | | 7 | | 8.93% | 6.55% | 6.55% | 5.90% | 4.888% | | 8 | | 4.46% | 6.55% | 6.55% | 5.90% | 4.522% | | 9 | | | 6.56% | 6.56% | 5.91% | 4.462% | | 10 | | | 6.55% |
Expert Solution
steps

Step by step

Solved in 3 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Financial Statements
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS