Columbia Southern University Operations And Supply Chain Management Assignment Help - the opportunity cost

Question - Revenues generated by a new fad product are forecast as follows: Year Revenues 1 $52,000 2
30,000 3 20,000 4 10,000 Thereafter 0 Expenses are expected to be 50% of revenues, and working
capital required in each year is expected to be 30% of revenues in the following year. The product
requires an immediate investment of $54,000 in plant and equipment. a. What is the initial investment
in the product? Remember working capital. Initial investment $ _________ b. If the plant and
equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation,
and the firms tax rate is 30%, what are the project cash flows in each year? (Enter your answers in
thousands of dollars. Do not round intermediate calculations. R ...Read More ound your answers to 2 decimal
places.) Year Cash Flow 1 $ _________ 2 _________ 3 _________ 4 ________ c. If the opportunity
cost of capital is 12%, what is project NPV? (Negative amount should be indicated by a minus sign.
Do not round intermediate calculations. Round your answer to 2 decimal places.) NPV $ __________
d. W hat is project IRR? (Do not round intermediate calculations. Round your answer to 2 decimal
places.) IRR ______% ...Read Less

Solution Preview - No Solution Preview Available

Original Question Documents

N/A