Tar Heel Case

Tar Heel Case - In-House Production12345NWCOperating

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Unformatted text preview: In-House Production12345NWCOperating Cost$(1,875,000)$(2,327,250)$(1,985,363)$(875,755)$(916,168)Year12345Depreciation$(1,825,000)$(1,825,000)$(1,825,000)$(1,825,000)$(1,825,000)NWC$112,500 $140,400 $121,680 $50,619 $52,644 $0 EBIT$(3,700,000)$(4,152,250)$(3,810,363)$(2,700,755)$(2,741,168)Change$112,500 $27,900 ($18,720)($71,061)$2,025 ($52,644)Taxes @35%$1,295,000 $1,453,288 $1,333,627 $945,264 $959,409 NOPAT$(2,405,000)$(2,698,963)$(2,476,736)$(1,755,491)$(1,781,759)Depreciation*We assume that the old equipment had been depreciated using straightline method for the first 3 yrsAdjustments:20%20%20%20%20%(+) Depreciation$1,825,000 $1,825,000 $1,825,000 $1,825,000 $1,825,000 Straightline (new)$(1,450,000)$(1,450,000)$(1,450,000)$(1,450,000)$(1,450,000)(-) Chgs in NWC$(112,500)$(27,900)$18,720 $71,061 $(2,025)$52,644 (-) Opportunity Cost (building)$(360,000)$(360,000)12.5%12.5%12.5%12.5%12.5%(-) Opportunity Cost (old equi$(750,000)Straightline (old)$(375,000)$(375,000)$(375,000)$(375,000)$(375,000)(-) Opportunity Cost (training)$(25,000)(-) CapEx$(8,000,000)Incremental$(1,825,000)$(1,825,000)$(1,825,000)...
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Tar Heel Case - In-House Production12345NWCOperating

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