A Corporation (HC) is planning to open new restaurant in Karachi. You as consultant has to advice HC for its projected cash flows. After long research, you have following figures for 1st year:Selling price per unit is Rs 500Units sold will be 100 items per day (Assume 360 days in a year)Variable Cost price per unit is Rs 250.Fixed Cost per year will be 4 millionYou have predicted 10% annual increment in selling price and units sold, 7% increment in variable cost and 5% increment in fixed cost in following years.Total asset of the company will be 4 million and the company uses MACRS depreciation with rates 33.33%, 44.45%, 14.81% and 7.41% respectively.The projected WACC of the company is 10%, tax rate is 35% and working capital as % of next year’s sale is 20%.Required:Calculate cash flows of the company for 5 years. A Corporation (HC) is planning to open new restaurant in Karachi. You as consultant has to adviceHC for its projected cash flows. After long research, you have following figures for 1st year:Selling price per unit is Rs 500Units sold will be 100 items per day (Assume 360 days in a year)Variable Cost price per unit is Rs 250.Fixed Cost per year will be 4 millionYou have predicted 10% annual increment in selling price and units sold, 7% increment in variablecost and 5% increment in fixed cost in following years.Total asset of the company will be 4 million and the company uses MACRS depreciation withrates 33.33%, 44.45%, 14.81% and 7.41% respectively.The projected WACC of the company is 10%, tax rate is 35% and working capital as % of nextyear's sale is 20%.Required:Calculate cash flows of the company for 5 years.

In the above question we have asked to calculate 5 year cash flow with the help of given data for…

Answered: A Corporation (HC) is planning to open…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 12P

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A Corporation (HC) is planning to open new restaurant in Karachi. You as consultant has to advice HC for its projected cash flows. After long research, you have following figures for 1^st year:

Selling price per unit is Rs 500

Units sold will be 100 items per day (Assume 360 days in a year)

Variable Cost price per unit is Rs 250.

Fixed Cost per year will be 4 million

You have predicted 10% annual increment in selling price and units sold, 7% increment in variable cost and 5% increment in fixed cost in following years.

Total asset of the company will be 4 million and the company uses MACRS depreciation with rates 33.33%, 44.45%, 14.81% and 7.41% respectively.

The projected WACC of the company is 10%, tax rate is 35% and working capital as % of next year’s sale is 20%.

Required:

Calculate cash flows of the company for 5 years.

A Corporation (HC) is planning to open new restaurant in Karachi. You as consultant has to advice
HC for its projected cash flows. After long research, you have following figures for 1st year:
Selling price per unit is Rs 500
Units sold will be 100 items per day (Assume 360 days in a year)
Variable Cost price per unit is Rs 250.
Fixed Cost per year will be 4 million
You have predicted 10% annual increment in selling price and units sold, 7% increment in variable
cost and 5% increment in fixed cost in following years.
Total asset of the company will be 4 million and the company uses MACRS depreciation with
rates 33.33%, 44.45%, 14.81% and 7.41% respectively.
The projected WACC of the company is 10%, tax rate is 35% and working capital as % of next
year's sale is 20%.
Required:
Calculate cash flows of the company for 5 years.

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