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NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 33,000,

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Answer #1
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

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