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connect ndow shows what is correct and incorrect for the work you have completed so far all of the work you have done so far is correct, you may not have completed everything value 16.70 points You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that backhand. You estimate the sales price of The Ultimate to be $340 per unit and sales volume to be 1.0 units in year 1: 1,250 units in year 2 and 1,325 units in year 3. The project has a 3-year life. Variable costs amount to $195 per unit and fxed costs are $100,000 per year. The project requires an initial investment of $147,000 in assets, which will be depreciated straight-line to zero over the 3-year project life. The actual market value of these assets at the end of year 3 is expected to be $29,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 39 percent and the required return on the project is 11 percent (Use SL depreciation table) What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign Do not round intermediate calculations. Round your final answers to 2 decimal places.) Year S (215000) G ·905600 $21,427.50 S 209,406 25 Total cash flow 0 Type here to search

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Calculation of operating cash flows Year 1 2 3 Sales ($) pu 340.00 340.00 340.00 V. cost pu ($) 195.00 195.00 195.00 Contribtion pu ($) 145.00 145.00 145.00 Sales (units) 1,000.00 1,250.00 1,325.00 Total sales 340,000.00 425,000.00 450,500.00 Less: Total V.cost -195,000.00 -243,750.00 -258,375.00 Contribution 145,000.00 181,250.00 192,125.00 Less: F.Costs -100,000.00 -100,000.00 -100,000.00 Less: Depreciation
(147000/3) -49,000.00 -49,000.00 -49,000.00 PBT 141,000.00 213,500.00 235,250.00 Less: Tax @39% -54,990.00 -83,265.00 -91,747.50 PAT 86,010.00 130,235.00 143,502.50 Add: Depreciation 49,000.00 49,000.00 49,000.00 Operating Cash flow before W.Capital changes 135,010.00 179,235.00 192,502.50

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