hw10 - 12.49%*454300=56492=397808 8.93%*397808=35524=362284

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1: initial investment = 10.4+5.4+650,000 = 16.45M 2: 30,000(45000) + 12000(85000) = 2,370,000 After new product 21000(12000) = 252,000 5000(45000) = 225,000 -1300(85000) = -110,500 366,500 when new product is offered. increase in sales 3. Sales 650,000 Variable cost (390,000) Fixed Cost (158,000) Depreciation (75,000) EBIT 27,000 Tax (35%) (9,450) Net Income 17,555 4: EBIT = 183,800; Taxes = 62,492; Net Income = 121,308 OCF = 27,000+75000-9450= 92,550 Depreciation tax shield = .34(135,000)= 45,900 5: Sales 85,000 Costs (43,000) Depreciation (3,000) EBIT 39,000 Tax (35%) (13,650) Net Income 25,350 OCF=39,000+3000-13650= 28350 Bottom Up = NI+Depre. => 25,350+3000= 28,350 Top-Bottom: Sales-cost-taxes => 85,000-43000-13650= 28650 Tax Shield: (sales-cost)(1-t)+Dep.*t => (85000-43000)(.65)+1050= 28,350 6: 14.29%*847000=121036=725964 24.49%*725964=177789=548176 17.49%*548176=95876=454300
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Unformatted text preview: 12.49%*454300=56492=397808 8.93%*397808=35524=362284 8.93%*362284=32352=329932 4.45%*329932=14682=315250 7: 440000/8=55000/year 440000-275,000=165,000 55,000+.35(165,000-55000)=>93,500 8: 9.3-9.3(.2+.32+.192+.1152)=1.6070M 2.1-.35(2.1-1.6070)=1.9275M 9: sales 2400000 cost 960000 dep 900000 EBIT 540000 Tax(.35) 189000 NI 351,000 OCF=540000+900000-189,000=1,251,000 10: 156,315 11: Year0=-3,000,000 Year1=1251,000 Year2= 1251,000 Year3= 1687000 Npv= 143,320 12: Year0=-3,000,000 Year1=1251,000 Year2= 1251,000 Year3= 1687000 Npv= 143,320 13: OCF= 120,000(1-.34)+(390,000/5)*.34 => 105,720 NPV = 24,736 14: OCF: 360000(1-.35)+(925,000/5)*.35 => 298750 16.59% 15: Yes the project should be accepted at both cost savings. 16: NPV = -327325 17: OCF= -34000(.65)+.35(210000/3)=2400 NPV = 195653...
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hw10 - 12.49%*454300=56492=397808 8.93%*397808=35524=362284

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