358846

358846 - Conch Republic Electronics Spent $750,000 to...

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Conch Republic Electronics Spent $750,000 to develop a new PDA Spent an additional $200,000 for marketing study to determine the expected sales. Can manufacture the new PDA with variable cost for $155.00 each. Fixed Costs for the operation are estimated at $4.7 million per year. Unit Price $360.00 each Necessary equipment to produce the PDA will cost $21.5 million, with depreciation for 7 years MACRS sched It is believed that this equipment after 5 years will be worth $4.1 million. NWC will be 20% of Sales Changes in NWC will occur in Year 1, with the first year sales. There is no initial outlay for NWC. Conch Republic Corporate Tax Rate is 35% and has a 12% required return. Estimated Sales Volumes: NWC 20% Estimated sales volume per year is 1. 74,000 2. 95,000 3. 125,000 4. 105,000 5. 80,000 What is the payback period, profitability index, IRR and the NPV of this project? For 7 year MACRS, the depreciation rates are Year 1 2 3 4 5 Depreciation Rate 0.14 0.25 0.18 0.13 0.09 The cash flows are below
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This note was uploaded on 05/09/2011 for the course FIN 101 taught by Professor Cho during the Spring '08 term at NYU.

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358846 - Conch Republic Electronics Spent $750,000 to...

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