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# Capital Budgeting

Need help completing yearly costs and answering Item V question D

See attached file for full problem description.

END OF YEAR 0 1 2 3

I. INVESTMENT OUTLAY
EQUIPMENT CST \$200,000.00
INSTALLATION \$40,000.00
INCREASE IN INVENTORY \$25,000.00
INCREASE IN ACCOUNTS PAYABLE \$5,000.00
TOTAL NET INVESTMENT \$270,000.00

II. OPERATIONS CASH FLOW
UNIT SALES (THOUSANDS) 100 100 100
PRICE UNIT \$2.00 \$2.00 \$2.00 \$2.00
TOTAL REVENUES
OPERATING COSTS, EXCLUDING DEPRECIATION \$30,000.00 \$120,000.00
DEPRECIATION \$240,000.00 \$36.00
TOTAL COSTS \$270,000.00 \$199,200.00 \$228,000.00
OPERATING INCOME BEFORE TAXES \$270,000.00 \$44,000.00
TAXES ON OPERATING INCOME \$108,000.00 0.3
OPERATING INCOME AFTER TAXES \$162,000.00 \$26,400.00
DEPRECIATION \$80,000.00 79,200 36,000
OPERATING CASH FLOW \$82,000.00 \$79,700.00

III. TERMINAL YEAR CASH FLOW
RETURN OF NET OPERATING WORKING CAPITAL
SALVAGE VALUE
TAX ON SALVAGE VALUE
TOTAL TERMINATION CASH FLOWS

IV. NET CASH FLOWS
NET CASH FLOW \$(260,000.00) \$89,700.00

V. RESULTS (QUESTION D.) no alternative use for the building over the next 4 years, npv, ipr, mirr, payback. Do these indicators suggest that the project shoulb be accepted?
NPV=
IPR=
MIRR=
PAYBACK=

#### Solution Summary

The solution explains the calculation of payback, NPV, IRR and MIRR for a expansion project.

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