- +44 141 628 6080
- info@tutorsglobe.com

Evaluate the initial investment in the product

Problem:

Project Evaluation:

Revenues generated by a new fad product are forecast as follows:

Year Revenues

1 $40,000.00

2 30,000.00

3 20,000.00

4 10,000.00

thereafter 0

Expenses are expected to be 40% of revenues, and working capital required in each year is expected to be 20% of revenues in the following year. The product requires an immediate investment of $45,000.00 in plant equipment.

Q1. What is the initial investment in the product? Remember working capital.

Q2. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm's tax rate is 40%, what are the project cash flows in each year?

Q3. If the opportunity cost of capital is 12%, what is the project Net Present Value?

Q4. What is the project Internal Rate of Return?

Now Priced at $20 (50% Discount)

Recommended **(97%)**

18,76,764

Questions

Asked

21,311

Experts

9,67,568

Questions

Answered

Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

Submit Assignment
## Q : What would be the present value of the bond

If the intrest rate increased to 10%, what would be the present value of the bond in A.