Week 6 Signature Assignment Second Group Project_Nealia F_Rhea R.pptx

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CAPITAL BUDGETING ANALYSIS
PROJECT PARAMETERSProject Cost; 10% of PPE =10% of 33,783,000=3,378,300Annual Depreciation Charge = (Cost – Salvage Value) / Useful Life = (3,378,300 – 168,915) / 12 =267,448.75Annual EBIT = 18% of 3,378,300 =608,094Changes in Net Working Capital =12%Marginal tax Rate = 35%WACC =
FREE CASH FLOW COMPUTATIONFree Cash Flows = EBIT + Depreciation – Changes in WorkingCapital – Capital Expenditure (Purchase of Assets) – TaxFree Cash Flows (Year 0) =(3,378,300)Free Cash Flows(Year 1-12) = 608,094 + 267,448.75- 0 -306,439.96=569,102.79
CAPITAL BUDGET RESULTSNet Present Value (NPV)(formula based on Excel) =
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Term
Fall
Professor
Paul Tovbin
Tags
Corporate Finance, Net Present Value, Internal rate of return, Free Cash Flows

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