Book1 - Danitza Vazquez International Buckeyes Case...

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Danitza Vazquez International Buckeyes Case Professor John T. Opincar Fin/571- Corporate Finance December 4,2010
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1 Year 2 Year 3 Year Price $3.15 $3.31 $3.48 Revenue $3,150,000.00 $3,310,000.00 $3,480,000.00 Variable Cost $262,500.00 $267,750.00 $273,100.00 Depraciation Estimates $1,200,000.00 $1,200,000.00 $1,200,000.00 EBT $1,687,500.00 $1,842,250.00 $2,006,900.00 Tax Estimate $573,750.00 $626,365.00 $682,346.00 EAT $1,113,750.00 $1,215,885.00 $1,324,554.00 Cash Flow $2,313,750.00 $2,415,885.00 $2,524,554.00 Net Present Value The net present value is the the present value of the expected future cash flows minus the cost of the The NPV helps to decide on the investments of the project by looking at the projected cash inflows Appliying this to a Buckeyes's Company, we will increase 25% profit on a 5 years project, the price The project initially cost a) In the fist year, we expect to make $ $2,313,750.00 b) In the second year, we expect to make $2,415,885.00 c) In the third year, we expect to make $2,524,554.00 d) In the fourth year, we expect to make $2,632,860.00 e) In the Fifth year, we expect to make $2,798,372.92 Present Values of: Year 1 Year2 $2,203,615.50 $2,415,885.00 Total $12,575,287.42 Substract our original investment in the project So is this project a go? If NPV is bigger than 0, then it's a go.
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