Current Attempt in ProgressYour answer is partially correct.You are the CFO of Sunland, Inc., a retailer of the exercise machine Slimbody6 and related accessories. Your firm is consideringopening up a new store in Los Angeles. The store will have a life of 20 years. It will generate annual sales of 5,900 exercise machines,and the price ofeach machine is $2,500. The annual sales of accessories will be $600,000, and the operating expenses of running thestore, including labor and rent, will amount to 50 percent of the revenues from the exercise machines. The initial investment in thestore will equal $34,900,000 and will be fully depreciated on a straight-line basis over the 20-year life of the store. Your firm willneed to invest $2,500,000 in additional working capital immediately, and recover it at the end of the investment. Your firm'smarginal tax rate is 30 percent. The opportunity cost of opening up the store is 12.20 percent. What are the incremental free cashflows from this project at the beginning of the project as well as in years 1-19 and 20? (Do not round intermediate calculations.Round NPV answer to 2 decimal places, e.g. 5,265.25 and all other answers to the nearest dollar, e.g. 5,265.)Incremental cash flow at the beginning of the project$437400000iIncremental cash flow in the years 1-19245896000Incremental cash flow in the year 20$8396000NPV of the project6343574.21Should you approve it?You should approvethe project.eTextbook and MediaMacBook Air

in this we have to calculate initial investment and present value of cash flow and find out net…

Your answer is partially correct. are the CFO of Sunland, Inc., a retailer of the exercise machine Slimbody6 and related accessories. Your firm ening up a new store in Los Angeles. The store will have a life of 20 years. It will generate annual sales of 5,900 the price of each machine is $2,500. The annual sales of accessories will be $600,000, and the operating expe re, including labor and rent, will amount to 50 percent of the revenues from the exercise machines. The initial re will equal $34,900,000 and will be fully depreciated on a straight-line basis over the 20-year life of the stor d to invest $2,500,000 in additional working capital immediately, and recover it at the end of the investment. ginal tax rate is 30 percent. The opportunity cost of opening up the store is 12.20 percent. What are the incre ws from this project at the beginning of the project as well as in years 1-19 and 2O? (Do not round intermedi nd NPV answer to 2 decimal places, e.g. 5,265.25 and all other answers to the nearest dollar, e.g. 5,2 remental cash flow at the beginning of the project $4 37400000 i remental cash flow in the years 1-19 24 5896000 remental cash flow in the year 20 8396000 V of the project 6343574.21 %24 %24 %24

Your answer is partially correct. are the CFO of Sunland, Inc., a retailer of the exercise machine Slimbody6 and related accessories. Your firm ening up a new store in Los Angeles. The store will have a life of 20 years. It will generate annual sales of 5,900 the price of each machine is $2,500. The annual sales of accessories will be $600,000, and the operating expe re, including labor and rent, will amount to 50 percent of the revenues from the exercise machines. The initial re will equal $34,900,000 and will be fully depreciated on a straight-line basis over the 20-year life of the stor d to invest $2,500,000 in additional working capital immediately, and recover it at the end of the investment. ginal tax rate is 30 percent. The opportunity cost of opening up the store is 12.20 percent. What are the incre ws from this project at the beginning of the project as well as in years 1-19 and 2O? (Do not round intermedi nd NPV answer to 2 decimal places, e.g. 5,265.25 and all other answers to the nearest dollar, e.g. 5,2 remental cash flow at the beginning of the project $4 37400000 i remental cash flow in the years 1-19 24 5896000 remental cash flow in the year 20 8396000 V of the project 6343574.21 %24 %24 %24

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 1dM

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