22 Sep Over lunch, you and Mary meet to discuss next steps with the
Over lunch, you and Mary meet to discuss next steps with the expansion project.“Do we have everything we need on sales and costs?” you ask. ”It must be time to compute the net present value (NPV) and internal rate of return (IRR) of the Apix expansion project.”“We have the data from James and Luke regarding projected sales and costs, respectively, for the food packaging project,” says Mary. “It is feasible to project that we will receive a tax break from this implementation. I have information from our audit firm that indicates that future depreciation methods for taxes will be straight-line; however, the corporate rates will be reduced to 35% as we assumed in our weighted average cost of capital (WACC) calculation.”“That sounds good,” you say.“Right,’ says Mary. ‘You can use a WACC of 10% for the computation of the NPV and comparison for IRR.’“I’ve got the information I need from Luke and James,” you say. ‘Does this look right to you? Here’s what they gave me,” you say, as you hand a sheet of paper to Mary.“Let’s look at this now while we’re together,” she says.The information you hand to Mary shows the following:Initial investment outlay of $30 million, consisting of $25 million for equipment and $5 million for net working capital (NWC) (plastic substrate and ink inventory); NWC recoverable in terminal yearProject and equipment life: 5 yearsSales: $25 million per year for five yearsAssume gross margin of 60% (exclusive of depreciation)Depreciation: Straight-line for tax purposesSelling, general, and administrative expenses: 10% of salesTax rate: 35%You continue your conversation.“It looks good,” says Mary. “Use this information from Luke and James to compute the cash flows for the project.”“No problem,” you say.“Then, compute NPV and IRR of the project using the Excel spreadsheet I sent earlier today,” says Mary. “Use the IRR financial function for the computation of IRR.”“Okay,” you say. ‘I’ll submit my Excel file showing the computation of cash flows, NPV, and IRR by the end of week so you can look at it over the weekend.”“Thanks,” says Mary.Complete the attached worksheet for this assignment.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Do you need help with this question?
Get assignment help from Aqhomework.com Paper Writing Website and forget about your problems.
Aqhomework provides custom & cheap essay writing 100% original, plagiarism free essays, assignments & dissertations.
With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Click Order now to access our order form, fill your paper details correctly, select your paper deadline and wait for our writers to send a perfectly written assignment.
Chat with us today! We are always waiting to answer all your questions.