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    Capital Budgeting

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    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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    https://brainmass.com/business/capital-budgeting/expansion-spreadsheet-description-114307

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    Solution Summary

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

    $2.19

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