Caledonia Products Integrative Problem

1529 Words7 Pages
Caledonia Products Integrative Problem
FIN/370
February 11, 2014

Caledonia Products Integrative Problem It has been two months since team B has been hired as an assistant financial analyst at Caledonia Products; the company has been pleased with our work. They are still a little hesitant to give us work without supervision. Caledonia Products Company is introducing a new product, we have been given the assignment that involves both the calculation of the cash flows associated with a new investment and the evaluation of several mutually exclusive projects. The company is currently in the 34% tax bracket with a 15% discount rate because this project is considered a fad project it will only last five years then it will be
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| 200,000 | 200,000 | 200,000 | 200,000 | 200,000 |
|Less: Depreciation | | 1,600,000 | 1,600,000 | 1,600,000 | 1,600,000 | 1,600,000 |
|Net Operating Income | | 6,600,000 | 12,600,000 | 15,000,000 | 7,800,000 | 3,000,000 |
|Less: Taxes (Tax rate is 34%) | | 2,244,000 | 4,284,000 | 5,100,000 | 2,652,000 | 1,020,000 |
|Net Operating Profit After Taxes| | 4,356,000 | 8,316,000 | 9,900,000 | 5,148,000 | 1,980,000 |
|(NOPAT) | | | | | | |
|Plus Depreciation | | 1,600,000 | 1,600,000 | 1,600,000 | 1,600,000 | 1,600,000 |
|Operating Cash Flow | | 5,956,000 | 9,916,000 | 11,500,000 | 6,748,000 | 3,580,000 |
| | | | | | | |
|Less Increase in Capital | (8,000,000) | | | | | |
|Expenditures (CAPEX) |

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