Need help ASAP Please Thank you RET Inc. currently has one product, low-priced stoves. RET Inc. has decided to sell a new line of medium-priced stoves. Sales for the new line of stoves are estimated at $30 million a year. Variable costs are 75% of sales. The project is expected to last 10 years. In addition to the production variable costs, the fixed costs each year will be $4,000,000. The company has spent $1,000,000 in research and a marketing study that determined the company will lose $10 million in sales a year of its existing low-priced stoves. The production variable cost of the existing low-priced stoves is $8 million a year. The plant and equipment required for producing the new line of stoves costs $10,000,000 and will be depreciated down to zero over 20 years using straight-line depreciation. It is expected that the plant and equipment can be sold (market or scrap value) for $6,000,000 at the end of 10 years. The new stoves will also require today an increase in net working capital of $2,000,000 that will be returned at the end of the project. The tax rate is 40 percent and the cost of capital is 10%. 1. What is the initial outlay (IO) for this project? 2. What is the annual Earnings before Interests, Taxes, and Depreciation (EBIDTA) for this project? A 3. What is the annual taxable income (or earnings before taxes) for this project? A/ 4. What is the annual Net Income (NI) for this project? 5. What is the operating cash flow (OCF) for this project? A 6. What is the remaining book value for the plant at equipment at the end of the project? A/ 7. What is the termination value for this project? 8. What is the Net Present Value (NPV) for this project? RET Inc. currently has one product, low-priced stoves. RET Inc. has decided to sell a new line of medium-priced stoves. Sales for the new line of stoves are estimated at $30 million a year. Variable costs are 75% of sales. The project is expected to last 10 years. In addition to the production variable costs, the fixed costs each year will be $4,000,000. The company has spent $1,000,000 in research and a marketing study that determined the company will lose $10 million in sales a year of its existing low-priced stoves. The production variable cost of the existing low-priced stoves is $8 million a year. The plant and equipment required for producing the new line of stoves costs $10,000,000 and will be depreciated down to zero over 20 years using straight-line depreciation. It is expected that the plant and equipment can be sold (market or scrap value) for $6,000,000 at the end of 10 years. The new stoves will also require today an increase in net working capital of $2,000,000 that will be returned at the end of the project. The tax rate is 40 percent and the cost of capital is 10%. 1. What is the initial outlay (IO) for this project? 2. What is the annual Earnings before Interests, Taxes, and Depreciation (EBIDTA) for this project? A 3. What is the annual taxable income (or earnings before taxes) for this project? A/ 4. What is the annual Net Income (NI) for this project? 5. What is the operating cash flow (OCF) for this project? A 6. What is the remaining book value for the plant at equipment at the end of the project? A/ 7. What is the termination value for this project? 8. What is the Net Present Value (NPV) for this project?

Name: Techwhiff
Address: 1520 Lavalette Ave, Elkins, WV 26241, USA, Elkins, 26241, US
Telephone: +1 681-298-8325
Price range: 10000

Part 6 Cost Less : Accumulated depreciation (10000000/20) 10 book value of plant at end of year 10 Part 1: Year O Investment in plant and equipment Investment in Working capital Initial outlay 12000000 Part 7 Part 2: Year 10 after tax cash flow of plant and equipment (6000000-5000000) (1-0.4 Recapture of Net working capital Termination value 600000 2000000 2600000 Sales from medium priced stove Less : Variable production cost for medium priced stove-30m*75% Less: contribution margin lost on low priced stove (10m-8m) Less: Fixed cost EBITDA |-22500000 2000000 4000000 1500000 Part 3 EBITDA Less : Depreciation-10000000/20 Taxable Income 1500000 500000 1000000 Part 4: Taxable Income Less: Tax at 40% Net Income 1000000 600000 Part 5 Net Income Add: Depreciation OCF 600000 500000 1100000 川 Sheet1 10 , Sheet1 11 Sheet1 12 , Sheet1 13 , Sheet1 14 , Sheet1 15 Sheet1 16 , Sheet1 17 Sheet1 18 ENG UK 07/04/2019 11:14 Part 8: 1 cash flow 0-12000000 1 1100000 2 1100000 3 1100000 41100000 51100000 6 1100000 7 1100000 8 1100000 9 1100000 10 3700000 Year PV factor at 10% | PV at 10% 1.00000|-12,000,000 0.90909 1,000,000 909,091 826,446 751,315 683,013 620,921 564,474 513,158 466,507 0.38554 1426.510 4,238,564 0.82645 0.75131 0.68301 0.62092 0.56447 0.51316 0.46651 0.42410 NPV .

RET Inc. currently has one product, low-priced stoves…

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Part 6 Cost Less : Accumulated depreciation (10000000/20) 10 book value of plant at end of year 10 Part 1: Year O Investment

Part 8: 1 cash flow 0-12000000 1 1100000 2 1100000 3 1100000 41100000 51100000 6 1100000 7 1100000 8 1100000 9 1100000 10 370

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