Redbird, Inc. is considering an addition to its current operations. The figures are below. Cost of the new project $3,000,000 Installation costs $100,000 Estimated unit sales in year 1 40,000 Estimated unit sales in year 2 65,000 Estimated unit sales in year 3 35,000 Estimated sales price in year 1 $200 Estimated sales price in year 2 $200 Estimated sales price in year 3 $150 Variable cost per unit $130 Annual fixed cost $40,000 Initial working capital needed $60,000 Additional Working capital needed 5 % of sales Depreciation method 5 years straight-line method, no salvage value Redbird's tax rate 40% Redbird's cost of capital 15% Calculate Operating Cash Flow, change in Net Working Capital, and calculate Free Cash Flow.
Show your calculations in a Word document or an Excel spreadsheet. Determine the NPV and IRR of the project. Show your calculations in a Word document or an Excel spreadsheet. Assess the project. Be sure to state the basis upon which you made your option choices. You should prepare a one-page executive summary of your findings, with 3-5 pages of supporting analysis. You must submit your backup in Excel or other supporting documentation showing how answers were reached.