FIN 3030 Corporate finance..Week 3 assignment 3.Redbird, Inc. is considering an - 18913

Solution Posted by
Waleedbravo

Waleedbravo

Rating : No Rating
Solution Detail
Price: $35.00
  • From: Business,
  • Posted on: Thu 18 Jul, 2013
  • Request id: None
  • Purchased: 0 time(s)
  • Average Rating: No rating
Request Description

.Redbird, Inc. is considering an addition to its current operations. The figures are below.



Redbird, Inc. is considering an addition to its current operations. The figures are below.

Cost of the new project $3,000,000
Installation costs $100,000
Estimated unit sales in year 1 40,000
Estimated unit sales in year 2 65,000
Estimated unit sales in year 3 35,000
Estimated sales price in year 1 $200
Estimated sales price in year 2 $200
Estimated sales price in year 3 $150
Variable cost per unit $130
Annual fixed cost $40,000
Initial working capital needed $60,000
Additional Working capital needed 5 % of sales
Depreciation method 5 years straight-line method, no salvage value
Redbird’s tax rate 40%
Redbird’s cost of capital 15%

 

  1. Calculate Operating Cash Flow, change in Net Working Capital, and calculate Free Cash Flow. Show your calculations in a Word document or an Excel spreadsheet.
  2. Determine the NPV and IRR of the project. Show your calculations in a Word document or an Excel spreadsheet.
  3. Assess the project. Be sure to state the basis upon which you made your option choices. You should prepare a one-page executive summary of your findings, with 3–5 pages of supporting analysis.
Solution Description

Please

Attachments
Week 3 executive summary.docx
Week 3 executiv...
Week 3 assignment 3.xlsx
Week 3 assignme...
Week 3 assignment 3(Word document).docx
Week 3 assignme...