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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=

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Solution Summary

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

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