You are considering a geographic expansion into the European market for Canopy Pharmaceuticals. Below are the incremental cash flows for the Canopy project for you to use in your analysis. Assume Canopy's marginal tax rate is 35%, their cost of capital is 15.7 % and an expected growth rate of 5% after 2003. 1998 1999 2000 2001 2002 2003 Net Sales 8,500 15,000 35,500 13,900 46,000 52,000 20,000 60,000 Cost of Sales 3,100 5,500 18,000 24,400 Depreciation 100 100 100 100 100 100 7,200 6,500 3,500 5,410 6,400 7,800 SGGA 5,300 1,100 700 5,400 7,000 R&D 2,800 4,100 EBIT 1,190 20,700 11,000 17,200 _6,020 18,200 6,370 11,830 Income Tax (35%) 417 774 245 3,850 7,150 1.245 455 Net Eamings Depreciation Operating Cash Flows 11,180 13,455 Net PPE (906) (2,030) (1394) (780) (900) (2457) (800) (1267) (300) (738) (200) (912) Working Capital Terminal Value Free Cash Flows

You are considering a geographic expansion into the European market for Canopy Pharmaceuticals. Below are the incremental cash flows for the Canopy project for you to use in your analysis. Assume Canopy's marginal tax rate is 35%, their cost of capital is 15.7 % and an expected growth rate of 5% after 2003. 1998 1999 2000 2001 2002 2003 Net Sales 8,500 15,000 35,500 13,900 46,000 52,000 20,000 60,000 Cost of Sales 3,100 5,500 18,000 24,400 Depreciation 100 100 100 100 100 100 7,200 6,500 3,500 5,410 6,400 7,800 SGGA 5,300 1,100 700 5,400 7,000 R&D 2,800 4,100 EBIT 1,190 20,700 11,000 17,200 _6,020 18,200 6,370 11,830 Income Tax (35%) 417 774 245 3,850 7,150 1.245 455 Net Eamings Depreciation Operating Cash Flows 11,180 13,455 Net PPE (906) (2,030) (1394) (780) (900) (2457) (800) (1267) (300) (738) (200) (912) Working Capital Terminal Value Free Cash Flows

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 9P

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You are considering a geographic expansion into the European market for Canopy Pharmaceuticals. Below are the incremental cash flows for the Canopy project for you to use in your analysis. Assume Canopy's marginal tax rate is 35%, their cost of capital is 15.7 % and an expected growth rate of 5% after 2003. 1998 1999 2000 2001 2002 2003 Net Sales 8,500 15,000 35,500 46,000 52,000 60,000 Cost of Sales 3,100 5,500 13,900 18,000 20,000 24,000 Depreciation 100 100 100 100 100 100 SG&A 3,500 5,410 6,400 5,300 7,200 7,800 R&D 1,100 2,800 4,100 5,400 6,500 7,000 EBIT 700 1,190 11,000 17,200 18,200 21,100 Taxes (35%) 245 417 3,850 6,020 6,370 7,385 Net Income 455 774 7,150 11,180 11,830 13,715 Depreciation 100 100 100 100 100 100 Operating Cash Flows 555 874 7,250 11,280 11,930 13,815 CAPEX (906)…
You are considering a geographic expansion into the European market for Canopy Pharmaceuticals. Below are the incremental cash flows for the Canopy project for you to use in your analysis. Assume Canopy's marginal tax rate is 35%, their cost of capital is 15.7 % and an expected growth rate of 5% after 2003. 1998 1999 2000 2001 2002 2003 Net Sales 8,500 15,000 35,500 46,000 52,000 60,000 Cost of Sales 3,100 5,500 13,900 18,000 20,000 24,000 Depreciation 100 100 100 100 100 100 SG&A 3,500 5,410 6,400 5,300 7,200 7,800 R&D 1,100 2,800 4,100 5,400 6,500 7,000 EBIT 700 1,190 11,000 17,200 18,200 21,100 Taxes (35%) 245 417 3,850 6,020 6,370 7,385 Net Income 455 774 7,150 11,180 11,830 13,715 Depreciation 100 100 100 100 100 100 Operating Cash…
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