FINANCIAL MANAGEMENT ASSIGNMENT - LEADSTAR COLLEGE OF...

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LEADSTAR COLLEGE OF MANAGEMENT AND LEADERSHIPFACULITY OF BUSINESS AND LEADERSHIP GRADUATEDEPARTMENT OF BUSINESS ADMINSTRATIONCOURSE NAME: : FINANCIAL MANAGEMENT (MBAC-505)FINANCIAL MANAGEMENT ASSIGNMENTPREPARED By:- DILBERHAN NEGA SUBMITTED TO:- LEADSTAR COLLEGE OF MANAGEMENT AND LEADERSHIP FOR DEGREE OF MBAJULY, 2018ADAMA, ETHIOPIATutor Marked Project Assignment
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Question-2Solution From the given the project’s cash flows and effect of inflation in forecasting the cash flows Annual revenue and cost estimates (assume 10% inflation rateYear 1Year 2Year 3Year 4Number of customers100,000100,000100,000100,000Fees per customer$5$5.5$ 6.05$ 6.655Cost per customer$3$3.3$ 3.63$ 3.993Fees$500,000$550,000$605,000 $665,500Costs$300,000$330,000 $363,000$399,300Depreciation Year 1 25%*365,000= 91250Year 2 25%*365,000=91250Year 3 25%*365,000=91250Year 4 25%*365,000=91250Net cash flows Year 1Year 2year 3Year 4Fees500,000550,000605,000 665,500Costs 300,000330,000 363,000399,300Depreciation 91250912509125091250EBIT108750128750150750174950Tax (30%)32625386254522552485NOPAT7612590125105525122465Add depreciation91250912509125091250Net operating cash flow1673751813751967752137152

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