Project X is a new type of Covid Analysis Equipment. We think we can sell 500 units per year at a price of 10Kes each. Variable costs will run about 5 Kes per unit, and the product should have a four year life. Fixed costs for the project will run about 610 Kes per year. Further, we will need to invest a total of 1100 Kes in manufacturing equipment.This equipment will be depreciated over the four years using the straight line method. In four years the equipmentwill be worth about half what we paid for it. We will have to invest 900 Kes in net working capital at the start of the project. After that net working capital requirements will be 30% of sales. If the required rate of return on this project is 10% and tax rate for the company is 30% (without using Excel) 1. Compute the operating cash flow for this project 2. Compute the total cash flows for the project after making the necessary adjustments 3. Determine the NPV of this project. Is the project acceptable? 4. Determine the payback period for the project 5. Determine the discounted payback period 6. Calculate the profitability index for the project. Is the project acceptable 7. Compute the Internal rate of return for the project. Is the project acceptable. 8. Compute the modified Internal Rate of Return
Project X is a new type of Covid Analysis Equipment. We think we can sell 500 units per year at a price of 10Kes each. Variable costs will run about 5 Kes per unit, and the product should have a four year life. Fixed costs for the project will run about 610 Kes per year. Further, we will need to invest a total of 1100 Kes in manufacturing equipment.This equipment will be depreciated over the four years using the straight line method. In four years the equipmentwill be worth about half what we paid for it. We will have to invest 900 Kes in net working capital at the start of the project. After that net working capital requirements will be 30% of sales. If the required
1. Compute the operating cash flow for this project
2. Compute the total cash flows for the project after making the necessary adjustments
3. Determine the NPV of this project. Is the project acceptable?
4. Determine the payback period for the project
5. Determine the discounted payback period
6. Calculate the profitability index for the project. Is the project acceptable
7. Compute the
8. Compute the modified Internal Rate of Return
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