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Author Question: TexMex Products is considering a new salsa whose data are shown below. The equipment has a constant ... (Read 73 times)

elarge

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on: Aug 7, 2023
TexMex Products is considering a new salsa whose data are shown below. The equipment has a constant capital cost allowance over its 3-year life with a zero salvage value. No new working capital would be required. Revenues and cash operating costs are expected to be constant over the project’s 3-year life. However, this project would compete with other TexMex products and would reduce the company’s pre-tax annual cash flows. What is the project’s NPV? (Hint: Cash flows are constant in Years 1 to 3. Actual CCA varies. The proposed CCA is for computational convenience.)

​

WACC

11%

Pre-tax cash flow reduction in other products (cannibalization)

$6,000

Investment cost

$77,340

Annual capital cost of allowance

$25,780

Annual sales revenues

$89,000

Annual cash operating costs

$31,000

Tax rate

36%


◦

$26,666


◦

$34,599


◦

$35,125


◦

$35,740

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Marked as best answer by elarge on Aug 7, 2023

gwisel

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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elarge

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Reply 2 on: Aug 7, 2023
YES! Correct, THANKS for helping me on my review

patma1981

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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