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Steve
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You will assess whether to make the investment or not. Use

Resolved Question:

You will assess whether to make the investment or not. Use your accept-reject rules for the net present value and the internal rate of return.

Redbird, Inc. is considering an addition to its current operations. The figures are below.

Cost of the new project
$3,000,000

Installation costs
$100,000

Estimated unit sales in year 1
40,000

Estimated unit sales in year 2
65,000

Estimated unit sales in year 3
35,000

Estimated sales price in year 1
$200

Estimated sales price in year 2
$200

Estimated sales price in year 3
$150

Variable cost per unit
$130

Annual fixed cost
$40,000

Initial working capital needed
$60,000

Additional Working capital needed
5 % of sales

Depreciation method
5 years straight-line method, no salvage value

Redbird’s tax rate
40%

Redbird’s cost of capital
15%




Calculate Operating Cash Flow, change in Net Working Capital, and calculate Free Cash Flow. Show your calculations in a Word document or an Excel spreadsheet.
Determine the NPV and IRR of the project. Show your calculations in a Word document or an Excel spreadsheet.
Assess the project. Be sure to state the basis upon which you made your option choices. You should prepare a one-page executive summary of your findings, with 3–5 pages of supporting analysis.
You must submit your backup in Excel or other supporting documentation showing how answers were reached.
Assignment 2 Grading Criteria Maximum Points
Demonstrated an ability to estimate the Cash Flows. 30
Demonstrated an ability to calculate NPV and IRR of the project. 30
Presented basis and justification for option selected. 10
Total: 70


For assistance with any problems you may have when completing this assignment—OR—to offer your assistance to classmates, please use the Problems and Solutions Discussion area located through the left side navigation link.
Submitted: 4 years ago.
Category: Homework
Expert:  Steve replied 4 years ago.
Sorry this is many hours work, I can't complete it.
Customer: replied 4 years ago.
i dont need until saturday.....you can take your time
Expert:  Steve replied 4 years ago.
sorry the time and effort requried FAR outstrips the value of the question...
Customer: replied 4 years ago.

is $30 ok? how do I increase the offer?

Expert:  Steve replied 4 years ago.

if you can offer $20 as tip/bonus after the question is answered, I can provide the excel, NPV and IRR and a brief summary of the analysis.

 

 

Customer: replied 4 years ago.
ok....I will do that..but remember, take your time, you have 2 days....Thank you in advance.
Expert:  Steve replied 4 years ago.

okay I will get it for you by saturday.

no need to respond again until I do.

 

Expert:  Steve replied 4 years ago.

hi please confirm you still need this and I will complete it today.

 

thanks,

 

Customer: replied 4 years ago.
Yes, I still need it...Sorry it took so long for me to respond to you...
Expert:  Steve replied 4 years ago.
Ok I will get it for you by the end of the night. Is that ok?
Customer: replied 4 years ago.

yes....thats fine

 

Expert:  Steve replied 4 years ago.

ok thanks will post it for you within a few hours

 

Customer: replied 4 years ago.
I really appreciate it....once you"re done, I will submit the $20 tip
Expert:  Steve replied 4 years ago.

terrefic

 

no need to respond again until I do

 

thanks

 

Expert:  Steve replied 4 years ago.
THIS ANSWER IS LOCKED!

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