2013年11月23日星期六

Finance Problem (NWC, Aftertax salvage, CFFA)?

  • cash flow define
  • your cash flow
  • sale lead generation
I've figured out part of the problem, but I'm having trouble with a couple others..


Larry is considering an expansion into the growing cheese doodle market. Larry will build a new facility on land he purchased 7 years ago for a price of $1Mil. The land is currently valued at $1.3Mil and is expected to be worth $1.7Mil in 4 years when Larry is finished with the market. All equipment necessary will cost $4.4Mil and will be depreciated to zero using the straight line method over the 4-yr life of the project. When the project ends, the equipment is expected to be worth $500K.


The project will req. an initial investment in net working capital of $100K, and an additional investment of $10k each subsequent year. Larry paid $125K to a marketing firm which estimates sales of $6.5Mil per yr with costs that are 70% of sales. Larry is taxed at a rate of 35% and requires a 13% return on all new projects.


What is the after tax salvage value of the land?

What is the amount of net working capital recovery in year 4?

&

What is the cash flow from assets (CFFA) for years 0 - 4?


I've found annual depreciation to be 1.1Mil, annual OCF to be 1,652,500, and after tax salvage value of the equipment to be 325K.


Thanks for any help
  • Additional Details
  • PrivateBanker - I was able to get the CFFAs for years 1,2,
  • cont.. but NWC recovery is not 100k. I should included I tried 100k and 140k already, but both were wrong. So I'm still looking for NWC recovery of yr 4

  • Finance Problem (NWC, Aftertax salvage, CFFA)?

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