11-03-09-FINAL - NorthWarehouse...

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North Warehouse West Warehouse Estimated first year revenue increase $650,000  $900,000  Estimated annual revenue growth 7% 8% Estimated contribution margin % 55% 45% Marginal tax rate 40% 40% Estimated annual fixed costs $100,000  $120,000  Investment in facility $1,500,000  $1,700,000  One-time advertising in year 0 $140,000  $150,000  Estimated salvage value in year 6 $125,000  $120,000  Discounting Rate 10%
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North Warehouse West Warehouse Estimated first year revenue increase $650,000  $900,000  Estimated annual revenue growth 7% 8% Estimated contribution margin % 55% 45% Marginal tax rate 40% 40% Estimated annual fixed costs $100,000  $120,000  Investment in facility $1,500,000  $1,700,000  One-time advertising in year 0 $140,000  $150,000  Estimated salvage value in year 6 $125,000  $120,000  Discounting Rate 10% Year 0  Year 1  Year 2 Year 3 Year 4 Year 5 Year 6 Initial Investment ($1,500,000) Advertising ($140,000) Salvage Value Revenues $650,000.00 $695,500.00 $744,185.00 $796,277.95 $852,017.41 Contribution Margin $357,500.00 $382,525.00 $409,301.75 $437,952.87 $468,609.57 Fixed Costs $100,000.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 Cash Flow $257,500.00 $282,525.00 $309,301.75 $337,952.87 $368,609.57 Depreciation $275,000.00 $275,000.00 $275,000.00 $275,000.00 $275,000.00 40% tax saved on dep. $110,000.00 $110,000.00 $110,000.00 $110,000.00 $110,000.00 Net Cash Flow PV -$1,640,000.00 $367,500.00 $392,525.00 $419,301.75 $447,952.87 $478,609.57 $125,000.00 Factor 10% present value 1.0000 0.9091 0.8264 0.7513 0.6830 0.6209 $0.5645 NPV FOR YEAR -$1,640,000.00 $334,094.25 $324,382.66 $315,021.40 $305,951.81 $297,168.68 $70,562.50 TOTAL NPV YEARS 0-6 ($398,194.60)
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North Warehouse West Warehouse Estimated first year revenue increase $650,000  $900,000  Estimated annual revenue growth 7% 8% Estimated contribution margin % 55% 45% Marginal tax rate 40% 40% Estimated annual fixed costs $100,000  $120,000  Investment in facility $1,500,000  $1,700,000  One-time advertising in year 0 $140,000  $150,000  Estimated salvage value in year 6 $125,000  $120,000  Discounting Rate 10% Year 0  Year 1  Year 2 Year 3 Year 4
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This note was uploaded on 10/29/2011 for the course ACCOUNTING ac201 taught by Professor Schmidt during the Spring '11 term at Colorado Technical University.

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11-03-09-FINAL - NorthWarehouse...

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