| NPV | 687101.51 |
| OCF | |
| Year | OCF |
| 1 | 310590.50 |
| 2 | 414366.00 |
| 3 | 387235.81 |
| 4 | 377133.23 |
| 5 | 379845.21 |
| 6 | 411723.73 |
| 7 | 445699.15 |
| 8 | 447239.59 |
| 9 | 451043.36 |
| 10 | 491508.40 |
Workings:
| Salvage | |
| Purchase price | 2200000 |
| Less: Depreciation | 2200000.00 |
| Closing book value | 0.00 |
| Selling price | 160000 |
| Gain/(loss) | 160000 |
| Tax/ Saving | -56000 |
| Net salvage | 104000 |
| OCF | MACRS 7 year | ||||||
| Year | Sales units*price | Cash flows | Depreciation | EBIT | Tax | PAT | OCF |
| 1 | 1419000 | 308550.00 | 314380.00 | -5830.00 | -2040.50 | -3789.50 | 310590.50 |
| 2 | 1505275.2 | 347373.84 | 538780.00 | -191406.16 | -66992.16 | -124414.00 | 414366.00 |
| 3 | 1596795.932 | 388558.17 | 384780.00 | 3778.17 | 1322.36 | 2455.81 | 387235.81 |
| 4 | 1693881.125 | 432246.51 | 274780.00 | 157466.51 | 55113.28 | 102353.23 | 377133.23 |
| 5 | 1796869.097 | 478591.09 | 196460.00 | 282131.09 | 98745.88 | 183385.21 | 379845.21 |
| 6 | 1906118.738 | 527753.43 | 196240.00 | 331513.43 | 116029.70 | 215483.73 | 411723.73 |
| 7 | 2022010.758 | 579904.84 | 196460.00 | 383444.84 | 134205.69 | 249239.15 | 445699.15 |
| 8 | 2144949.012 | 635227.06 | 98120.00 | 537107.06 | 187987.47 | 349119.59 | 447239.59 |
| 9 | 2275361.912 | 693912.86 | 0.00 | 693912.86 | 242869.50 | 451043.36 | 451043.36 |
| 10 | 2413703.916 | 756166.76 | 0.00 | 756166.76 | 264658.37 | 491508.40 | 491508.40 |
| Year | Initial cash flow | OCF | Salvage | Net cash flows |
| 0 | -2200000 | -2200000.00 | ||
| 1 | $310,590.50 | 310590.50 | ||
| 2 | $414,366.00 | 414366.00 | ||
| 3 | $387,235.81 | 387235.81 | ||
| 4 | $377,133.23 | 377133.23 | ||
| 5 | $379,845.21 | 379845.21 | ||
| 6 | $411,723.73 | 411723.73 | ||
| 7 | $445,699.15 | 445699.15 | ||
| 8 | $447,239.59 | 447239.59 | ||
| 9 | $451,043.36 | 451043.36 | ||
| 10 | $491,508.40 | 104000 | 595508.40 |

NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity...
NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 36,000, with an annual growth rate of 4.00% over the next ten years. The sales price per unit will start at $42.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $2,300,000. It will be depreciated...
10.7
NPV. Miglietti Restaurants is looking at a project with the
following forecasted sales: first-year sales quantity of
35,000, with an annual growth rate of 4.00% over the next ten
years. The sales price per unit will start at $40.00 and will grow
at 2.00% per year. The production costs are expected to be 55% of
the current year's sales price. The manufacturing equipment to aid
this project will have a total cost (including installation) of
$2,300,000. It will...
NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 30,000, with an annual growth rate of 4.00% over the next ten years. The sales price per unit will start at $45.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $2,100,000. It will be depreciated...
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