feedback

(Solution document) A client of your financial consulting firm, Omaha Awesome Cab Manufacturing Company, is considering a new investment proposal that involves


A client of your financial consulting firm, Omaha Awesome Cab Manufacturing Company, is considering a new investment proposal that involves manufacturing and selling bright blue self-driving taxi cabs. You are asked to create the NPV analysis. Your client has assembled the following information:

  • A new machine will have to be purchased today (Year 0) at a cost of $120,000.
  • It will generate revenues, all of which are taxable, expected to be $265,000, $240,000, and $215,000 in each of the three years (Years 1, 2, and 3) of the project's life.
  • Gross profit expected to be 30% of sales revenue.
  • The new machine will be depreciated straight-line down to its salvage value of $0 over the three-year life of the project.
  • The tax rate of the client is 21%.
  • The company has a WACC of 14%.


What will be the net cash flow in year 0 (a positive number means cash inflow, a negative number means cash outflow)?

 







About this question:

Pay using PayPal (No PayPal account Required) or your credit card. All your purchases are securely protected by .
SiteLock