Project 3

Mini case:

PaddleX has decided to introduce a new line of paddle board. The board will sell for $875 each and have a variable cost of $430 each. The company has spent $150,000 for a marketing study that determine the company will sell 60,000 units of the new board per year for seven years. The marketing study also determined that the company will lose sales of 12,000 units of its high-priced board. The high-priced board sell at $1,100 each and have variable costs of $620. The company will also increase sales of its cheap board by 15,000 units. The cheap board sell for $400 each and have variable costs of $210 each. The fixed cost each year is $9,300,000. The company also spent $1,000,000 on R&D for the new board. The plant and equipment required will cost $29,400,000 and will be depreciated on a straight-line basis over 7 years to a salvage value of $0. The new board will also require an increase in net working capital of $1,400,000 that will be fully recovered at the end of the project. The tax rate is 21% and the cost of capital is 16 percent.

1. What are the incremental operating cash flows for this project?

2. What are the incremental cash flows associated with net working capital?

3. What are the incremental cash flows associated with investments?

4. What is the payback for this project?

5. What is the IRR of this project?

6. What is the NPV of this project?

Project Submission Instructions:

Please use an Excel file with all relevant information clearly laid out. Please first layout the project cash flows analysis for base-case with all relationship between variables captured with underlying Excel formula. That is, numbers that are not directly given by the case but are calculated based on case information shall be reflected in Excel as results of calculated number. Do not just paste numbers in the submitted file as results of your calculation elsewhere. Please try to lay out the information and steps in a clear and organized way. Make your answer to each of the above questions either to locate and identify by bold fonts and/or highlighting the cells.

Answered Same DayMar 05, 2022

Sheet1

Paddle Board High Priced Board Low Priced Board

Price Per Unit 875 Price Per Unit 1100 Price Per Unit 400

VC Per Unit 430 VC Per Unit 620 VC Per Unit 210

Marketing Cost 150000 Lost Sales (in Units) 12000 Increased Sales (in Units) 15000

Number of Units Sold 60000

Tax Rate 21%

Cost of Capital 16%

Year 0 1 2 3 4 5 6 7

Revenue 52,500,000 52,500,000 52,500,000 52,500,000 52,500,000 52,500,000 52,500,000

Marketing Study -150,000

Variable Cost 25,800,000 25,800,000 25,800,000 25,800,000 25,800,000 25,800,000 25,800,000

Fixed...

Paddle Board High Priced Board Low Priced Board

Price Per Unit 875 Price Per Unit 1100 Price Per Unit 400

VC Per Unit 430 VC Per Unit 620 VC Per Unit 210

Marketing Cost 150000 Lost Sales (in Units) 12000 Increased Sales (in Units) 15000

Number of Units Sold 60000

Tax Rate 21%

Cost of Capital 16%

Year 0 1 2 3 4 5 6 7

Revenue 52,500,000 52,500,000 52,500,000 52,500,000 52,500,000 52,500,000 52,500,000

Marketing Study -150,000

Variable Cost 25,800,000 25,800,000 25,800,000 25,800,000 25,800,000 25,800,000 25,800,000

Fixed...

SOLUTION.PDF## Answer To This Question Is Available To Download

- MCO201 CORPORATE FINANCE Task brief & rubricsFinal assessment Exam – Dashboard about investmentsDetails of the task as follow: · Individual report in Pdf format is required · The objective...SolvedMar 19, 2022
- Introduction: You have recently been hired as a Financial Analyst in the Finance Department of Zeta Auto Corporation which is seeking to expand production. The CFO asks you to help decide whether...SolvedMar 14, 2022
- Problem 1Existing capital structure:Debt: 5,000 Eight percent (8%) coupon bonds outstanding. The par value is $1000 and they mature in ten years. They are currently selling for $1250 and...SolvedMar 13, 2022
- FS to FCF TemplateSolution LegendValue given in problemFormula/Calculation/Analysis requiredQualitative analysis or Short answer...SolvedMar 13, 2022
- Assessment 3:Statistical Group ReportAssessment OverviewDetailLengthWeightingDueThe focus of this report is on risk, return and equity valuation. The expectation is that students will develop skills...SolvedMar 12, 2022
- BA540 Winter 2022 Final Group ProjectThis case mirrors the many aspects of business valuation discussed in Chapter 19. It also in a nutshell summarizes/connects the many knowledge and skills related...SolvedMar 12, 2022
- This assignment requires posting spreadsheets with your calculation answers in Classes Assignments. You should submit one big spreadsheet with separate tabs for each problem or problem part. If one...SolvedMar 11, 2022
- Problem 1Cece Equestrian ToursProbabilityNPVANPVB15%(34,000)(12,750)20%(8,500)2,12530%17,00017,00020%42,50031,87515%68,00046,750Expected NPVVarianceStandard...SolvedMar 06, 2022
- UNIVERSITY OF SYDNEY BUSINESS SCHOOLFMBA5006 FINANCIAL MANAGEMENTINDIVIDUAL ASSIGNMENTPART A (70 marks)You have been approached by the strategy team in your company. They are considering...SolvedFeb 28, 2022
- Problem 1You start a new job. They give you a variety of investments for your 401K plan. You have 4 choicesA money market fund that historically has returned 2.5% per yearA long term bond fund...SolvedFeb 27, 2022

Copy and Paste Your Assignment Here

Disclaimer: The reference papers provided by TAE serve as model papers for students and are not to be submitted as it is. These papers are intended to be used for research and reference purposes only.

Copyright © 2022. All rights reserved.