Explore BrainMass

Explore BrainMass

    Capital Budgeting of a New Product.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Your company has spent $200,000 on research to develop a new product. The firm is planning to spend $300,000 on a machine to produce the product. Shipping and installation costs of the machine will be capitalized and depreciated; they total $25,000. The machine has an expected life of 3 years, a $50,000 estimated resale value, and falls under the MACRS 7-Year class life. Revenue from the new product is expected to be $400,000 per year, with costs of $150,000 per year. The firm has a tax rate of 35 percent, an opportunity cost of capital of 10 percent, and it expects net working capital to increase by $75,000 at the beginning of the project. Should you proceed with this project? Explain.

    Should you proceed with this project? Explain.

    Please help with figuring the years Sales, Fixed Costs, Depreciation, EBIT, Taxes, and Net Income. Also help with Operating Cash Flow, Change in NWC, Change
    In Fixed Assets and Total Cash Flow

    © BrainMass Inc. brainmass.com June 4, 2020, 1:38 am ad1c9bdddf

    Solution Summary

    This solution helps with a problem involving capital budgeting of a new product.