Project cash flow (Cash Flow From Assets) for Year 1 is:$5,800,600$4,756,384$7,800,231$6,800,470O $9,120,000 Use the following information for the next four questions:The Anti-Zombie Corporation is considering expanding one of its production facilities to research a new type of virus, which willhopefully not cause a future zombie outbreak. The project would require a $24,000,000 capital investment and will bedepreciated (straight-line to zero) over its 3 year life. They know that they will be able to salvage $6,000,000 for the equipmentat that time.Incremental sales are expected to be $16,000,000 annually for the 3 year period with costs (excluding depreciation) of 40% ofsales. The company would also have to commit initial working capital to the project of $2,000,000. The company has a 30% taxrate, and requires a 15% rate of return for projects of this risk level.

Net cash flows from assets is the operating cash flows of the project investment. Operating cash…

Answered: Project cash flow (Cash Flow From…

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Project cash flow (Cash Flow From Assets) for Year 1 is: $5,800,600 $4,756,384 O $7,800,231 $6,800,470 $9,120,000

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 1nM

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I have a question about some calculations that I have done for the question below. Pharmos Incorporated is a Pharmaceutical Company which is considering investing in a new production line of portable electrocardiogram (ECG) machines for its clients who suffer from cardio vascular diseases. The company has to invest in equipment which cost $2,500,000 and falls within a MARCS depreciation of 5-years, and is expected to have a scrape value of $200,000 at the end of the project. Other than the equipment, the company needs to increase its cash and cash equivalents by $100,000, increase the level of inventory by $30,000, increase accounts receivable by $250,000 and increase account payable by $50,000 at the beginning of the project. Pharmos Incorporated expect the project to have a life of five years. The company would have to pay for transportation and installation of the equipment which has an invoice price of $450,000.The company has already invested $75,000 in Research and Development…
harmos Incorporated is a Pharmaceutical Company which is considering investing in a new production line of portable electrocardiogram (ECG) machines for its clients who suffer from cardio vascular diseases. The company has to invest in equipment which cost $2,500,000 and falls within a MARCS depreciation of 5-years, and is expected to have a scrape value of $200,000 at the end of the project. Other than the equipment, the company needs to increase its cash and cash equivalents by $100,000, increase the level of inventory by $30,000, increase accounts receivable by $250,000 and increase account payable by $50,000 at the beginning of the project. Pharmos Incorporated expect the project to have a life of five years. The company would have to pay for transportation and installation of the equipment which has an invoice price of $450,000. The company has already invested $75,000 in Research and Development and therefore expects a positive impact on the demand for the new product line.…
AD, a pharmaceutical company, has developed a new drug that will supposedly cure COVID-19 and provide immunity to the general population. The results are so promising that the company will purchase land for $1M to build a manufacturing center that will produce this drug in sufficient quantities. This facility will cost $185 million to build. The project will take 10 years and will initially require $535 million in net working capital. Also, the company will spend $5 million on R&D and $4 million in marketing the drug to the general population. The drug will sell for $1,500 in the first five years. Anticipating improved efficiency the drug will sell for $1,250 in years 6 through 9 and $1,000 in year 10. Variable costs will be $400 per unit. Annual fixed costs will be 11% of that year’s total revenue. Marketing has projected annual sales as follows: PROJECT YEAR ANNUAL UNIT SALES 1 15,000 2 25,000 3 100,000 4 100,000 5 100,000 6…
Pharmos Incorporated is a Pharmaceutical Company which is considering investing in a new production line of portable electrocardiogram (ECG) machines for its clients who suffer from cardio vascular diseases. The company has to invest in equipment which cost $2,500,000 and fallswithin a MARCS depreciation of 5-years, and is expected to have a scrape value of $200,000 at the end of the project. Other than the equipment, the company needs to increase its cash and cash equivalents by $100,000, increase the level of inventory by $30,000, increase accounts receivable by $250,000 and increase account payable by $50,000 at the beginning of the project. Pharmos Incorporated expect the project to have a life of five years. The company would have to pay for transportation and installation of the equipment which has an invoice price of $450,000. The company has already invested $75,000 in Research and Development and therefore expects a positive impact on the demand for the new product line.…
Pharmos Incorporated is a Pharmaceutical Company which is considering investing in a new production line of portable electrocardiogram (ECG) machines for its clients who suffer from cardio vascular diseases. The company has to invest in equipment which cost $2,500,000 and falls within a MARCS depreciation of 5-years, and is expected to have a scrape value of $200,000 at the end of the project. Other than the equipment, the company needs to increase its cash and cash equivalents by $100,000, increase the level of inventory by $30,000, increase accounts receivable by $250,000 and increase account payable by $50,000 at the beginning of the project. Pharmos Incorporated expect the project to have a life of five years. The company would have to pay for transportation and installation of the equipment which has an invoice price of $450,000.The company has already invested $75,000 in Research and Development and therefore expects a positive impact on the demand for the new product line.…
Pharmos Incorporated is a Pharmaceutical Company which is considering investing in a new production line of portable electrocardiogram (ECG) machines for its clients who suffer from cardio vascular diseases. The company has to invest in equipment which cost $2,500,000 and falls within a MARCS depreciation of 5-years, and is expected to have a scrape value of $200,000 at the end of the project. Other than the equipment, the company needs to increase its cash and cash equivalents by $100,000, increase the level of inventory by $30,000, increase accounts receivable by $250,000 and increase account payable by $50,000 at the beginning of the project. Pharmos Incorporated expect the project to have a life of five years. The company would have to pay for transportation and installation of the equipment which has an invoice price of $450,000. The company has already invested $75,000 in Research and Development and therefore expects a positive impact on the demand for the new product line.…
Pharmos Incorporated is a Pharmaceutical Company which is considering investing in a new production line of portable electrocardiogram (ECG) machines for its clients who suffer from cardio vascular diseases. The company has to invest in equipment which cost $2,500,000 and falls within a MARCS depreciation of 5-years, and is expected to have a scrape value of $200,000 at the end of the project. Other than the equipment, the company needs to increase its cash and cash equivalents by $100,000, increase the level of inventory by $30,000, increase accounts receivable by $250,000 and increase account payable by $50,000 at the beginning of the project. Pharmos Incorporated expect the project to have a life of five years. The company would have to pay for transportation and installation of the equipment which has an invoice price of $450,000.The company has already invested $75,000 in Research and Development and therefore expects a positive impact on the demand for the new product line.…