PV.  Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of
36 comma 00036,000,
with an annual growth rate of
4.004.00%
over the next ten years. The sales price per unit will start at
$40.0040.00
and will grow at
2.00 %2.00%
per year. The production costs are expected to be
5555%
of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of
$2 comma 400 comma 0002,400,000.
It will be depreciated using MACRS,
LOADING...
,
and has a seven-year MACRS life classification. Fixed costs will be
$340 comma 000340,000
per year. Miglietti Restaurants has a tax rate of
4040%.
What is the operating cash flow for this project over these ten years? Find the NPV of the project for Miglietti Restaurants if the manufacturing equipment can be sold for
$130 comma 000130,000
at the end of the ten-year project and the cost of capital for this project is
99%.