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Business, 05.05.2020 08:34 kayla232734

For a new process, the land was purchased for $10 million. The fixed capital investment, paid at the end of year 0, is $165 million. The working capital is $15 million, and no salvage value. The estimated revenue from years 1 through 10 is $70 million/y, and the estimated cost of manufacture over the same time period is $25 million/y. The internal hurdle rate (interest rate) is 14% p. a., before taxes, and the taxation rate is 40%.
Required:
a. Draw a discrete, nondiscounted cash flow diagram for this process.
b. Determine the yearly depreciation schedule using the five-year MACRS method.
c. Determine the after-tax profit for each year.
d. Determine the after-tax cash flow for each year.
e. Draw a discrete, discounted (to year 0) cash flow diagram for this process.
f. Draw a cumulative, discounted (to year 0) cash flow diagram for this process.
g. What is the present value (year 0) of this process?

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