Aunt Sally’s Sauces Inc., is considering expansion into a new line of all-natural, cholesterol-free, sodium-free, fat-free, low-calorie tomato sauces. Sally has paid $3,000 for a marketing study which indicates that the new product line would have sales of $870,000 per year for the next six years. Manufacturing plant and equipment would cost $600,000 and will be depreciated using the following annual depreciation rates: 0.2, 0.32, 0.1920, 0.1152, 0.1152, 0.0576. The fixed assets will have no market value at the end of six years. Annual fixed costs are projected at $80,000 and variable costs are projected at 29% of sales. Net operating working capital requirements are $75,000 for the six-year life of the project; the outlay for working capital will be recovered at the end of six years. Aunt Sally’s tax rate is 25% and the firm requires a 10% return. The projected Free Cash Flow(FCF) in the first year is $___________________.

Eradicator Food Prep, Inc. has invested $10million to construct a food irradiation plant. Thistechnology destroys organisms that cause spoilageand disease, thus extending the shelf life of freshfoods and the distances over which they can beshipped. The plant can handle about 300,000 poundsof produce in an hour, and it will be operated for4,000 hours a year. The net expected operating andmaintenance costs (taking into account income-taxeffects) would be $4 million per year. The plant isexpected to have a useful life of 15 years with a netsalvage value of $800,000. The firm’s interest rateis 15%.(a) If investors in the company want to recover theplant investment within six years of operation(rather than 15 years), what would be the equivalent annual revenues that must be generated?(b) To generate annual revenues determined in part(a), what minimum processing fee per poundshould the company charge to its producers?

Be sure to answer all parts of this question. A nut processing facility in the Central Valley of California supplies both inshell and shelled walnuts and almonds to retailers. An analyst recently obtained estimates to install a new cooling system and needs to evaluate life-cycle costs at the company's before-tax MARR of 8% per year. The system would be used for eight years, and the estimates are: Preliminary feasibility study (this year, year 0) $50,000 Purchase & install system (this year, year 0) $2,500,000 Annual operating costs (years 1-8) Salvage value (year 8) Other phase-out activities (year 8) $150,000 in year 1, increasing by $10,000 each year $250,000 $100,000 a. What is the capital recovery (CR) cost of the system? [Select] b. What is the annual equivalent worth of the annual operating costs for eight years? I Select) [ Select ] c. What is the annual equivalent cost of this project?

Big Rock Brewery currently rents a bottling machine for $51,000 per year, including all maintenance expenses. The company is considering purchasing a machine instead and is comparing two alternate options: option a is to purchase the machine it is currently renting for $160,000, which will require $20,000 per year in ongoing maintenance expenses, or option b, which is to purchase a new, more advanced machine for $250,000, which will require $19,000 per year in ongoing maintenance expenses and will lower bottling costs by $13,000 per year. Also, $36,000 will be spent upfront in training the new operators of the machine. Suppose the appropriate discount rate is 9% per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each year, as is the rental of the machine. Assume also that the machines are subject to a CCA rate of 45% and there will be a negligible salvage value in 10 years' time (the end of each machine's life). The marginal corporate tax…