Question

t Income Cats Google Sheets Dealer Sode x ercise/users/answers/14804343/edit Google Calender November 20 Cep Blectron CSePub Home Book Store Instructors Independent Authors About Suppose that alloway golf would to capitaleon Phil Mche winning the Open Championship in 2013 by releasing a new putter The new product will require new for $400 00 00 that will be depreciated using the 5-year MACRS schedule The Dr u n for 2 years with the following forecasted numbers woment Putter price $60.55 Units sold 19.542.00 11,585 00 COGS 3900% of sales 39.00% of sales Seling and Administrative 21.00% of sales 21.00% of sales Calloway has a 14.00% cost of capital and a 3900. The firm expect to sell the equipment after 2 years for a NS What is the project cash flow for year 1? Answer Format Currency: Round for 2 decimal places Enter Answer Here Submit Answer Prev Problem + All Problems Next Probleme Copyright 208 Carley S i ng Alighierved. Contact Us Privacy Policy Terms et e 90- DLL

Answer 1

Depreciation for Year 1 = Cost of Equipment * Depreciation Rate

= $400,000 * 0.20 = $80,000

Annual Sales = Units sold * Unit Price = 19,542 * $60.55 = $1,183,268.10

Cash Flow for Year 1 = [Annual Sales * {1 - (COGS% + S&A%)}] * (1 - t) + [Depreciation * t]

= [$1,183,268.10 * {1 - (0.39 + 0.21)}] * (1 - 0.39) + [$80,000 * 0.39]

= [$473,307.24 * 0.61] + $31,200

= $288,717.42 + $31,200 = $319,917.42