California State University Operations And Supply Chain Management Assignment Help - Finance NPV/OCF

Question - 17. value:
5.00 points
Consider a project to supply Detroit with 25,000 tons of machine screws annually for automobile
production. You will need an initial $2,200,000 investment in threading equipment to get the project
started; the project will last for five years. The accounting department estimates that annual fixed
costs will be $700,000 and that variable costs should be $400 per ton; accounting will depreciate the
initial fixed asset investment straight-line to zero over the five-year project life. It also estimates a
salvage value of $300,000 after dismantling costs. The marketing department estimates that the
automakers will let the contract at a selling price of $480 per ton. The engineering department
estimates you will ne ...Read More ed an initial net working capital investment of $220,000. You require a 15 percent
return and face a marginal tax rate of 38 percent on this project.
a-1 What is the estimated OCF for this project?

OCF $

a-
2
What is the estimated NPV for this project? (Round your answer to 2 decimal places. (e.g.,
32.16))
NPV $

b.
Suppose you believe that the accounting department's initial cost and salvage value projections
are accurate only to within A?±15 percent; the marketing department's price estimate is accurate
only to within A?±10 percent; and the engineering department's net working capital estimate is
accurate only to within A?±5 percent. W hat is your worst-case and best-case scenario for this
project? (Negative amounts should be indicated by a minus sign. Round your answers to 2
decimal places. (e.g., 32.16))

Worst-case $
Best-case $ ...Read Less

Solution Preview - No Solution Preview Available

Original Question Documents

N/A