Which of the following pure elements could be represented by…
Which of the following pure elements could be represented by the picture shown below?
Which of the following pure elements could be represented by…
Questions
Which оf the fоllоwing pure elements could be represented by the picture shown below?
[Q1-Q6 relаted] Q4. ABC Cоmpаny is cоnsidering аdding a new line tо its product mix, and the capital budgeting analysis is being conducted by Sidney Johnson, a recently graduated MBA. The production line would be set up in unused space in ABC' main plant. The machinery’s invoice price would be approximately $180,000; another $10,000 in shipping and insurance charges would be required; and it would cost an additional $10,000 to install the equipment. The machinery has an economic life of 3 years, and ABC has obtained a tax ruling which places the equipment in the MACRS 3-year class. The machinery is expected to have a salvage value of $10,000 after 3 years of use. The new line would generate additional sales of 3,000 units per year for three years at a cost of $100 per unit in the first year, excluding depreciation. Each unit can be sold for $200 in the first year. The sales price and cost are expected to increase by 5% per year due to inflation. Further, to handle the new line, the firm’s net operating working capital(t) would have to increase by an amount equal to 10% of sales revenues (t+1). The firm’s tax rate is 40 percent, and its overall weighted average cost of capital is 10 percent. Year Depreciation Rate 1 33% 2 45% 3 15% 4 7% What is the cash flows due to net operating working capital (NOWC) in Year 3?