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Cash Flows-Mason Products Sequel

Cash Flows-Mason Products Sequel - It'.Yournext

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Mason Products – The Sequel It's been two months since you took a position as an assistant financial analyst at Mason Products.  Your next  assignment involves both the calculation of cash flows associated with a new investment under consideration  and the evaluation of several mutually exclusive projects. Currently, Mason is in the  34 percent marginal tax  bracket with a  15 percent required rate of return  or cost of capital.  This project is expected to last five years  and then, because this is somewhat of a fad project, to be terminated. The following information describes the new project: __________________________________________________________________________ Cost of new plant and equipment $7,900,000 Shipping and installation costs $  100,000 Unit sales :    Year       Units Sold 70,000 120,000 140,000 80,000 60,000 Sales price per unit : $300/unit in years 1-4, $260/unit in year 5 Variable cost per unit : $180/unit Annual fixed costs : $200,000 Working-capital requirements : There will be an initial working-capital requirement of $100,000 just to get  production started. For each year, the total investment in net working capital will be equal to 10 percent of  the dollar value of sales for that year. Thus, the investment in working capital will increase during years 1 
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Cash Flows-Mason Products Sequel - It'.Yournext

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