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