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Author Question: Use the table for the question(s) below.Year 0Years 1 to 10Revenues3.50-Manufacturing ... (Read 39 times)

TVarnum

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Use the table for the question(s) below.

Year 0Years 1 to 10
Revenues3.50
-Manufacturing Expenses-0.5
-Marketing Expenses-0.25
-Depreciation-0.8
=EBIT1.95
-Taxes (40%)-0.78
=Unlevered net income1.17
+Depreciation+0.8
-Additions to Net Working Capital-0.2
-Capital Expenditures-8.00
=Free Cash Flow1.77


Panjandrum Industries, a manufacturer of industrial piping, is evaluating whether it should expand into the sale of plastic fittings for home garden sprinkler systems. It has made the above estimates of free cash flows resulting from such a decision (all quantities in millions of dollars). There are some concerns that estimates of manufacturing expenses may be low, due to the rising cost of raw materials. What is the break-even point for manufacturing expenses, if all other estimates are correct and the cost of capital is 10%?
◦ $1.22 million
◦ $0.78 million
◦ $0.88 million
◦ $0.97 million


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Marked as best answer by TVarnum on Jul 9, 2019

durant1234

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TVarnum

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Reply 2 on: Jul 9, 2019
Thanks for the timely response, appreciate it


ultraflyy23

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Reply 3 on: Yesterday
:D TYSM

 

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