Whar are the annual depreciation charges what are the


An finance analyst, you must evaluate a proposed project to produce printer cartridges. The equipment would cost $55,000, plus 10,000 for installation.Annual sales would be 4,000 units at a price of $50 per cartridge, and the prjects life would be 3 years. Current assets would increase by $5,000 and payables by $3,00. At the end of 3 years, the equipment could be sold for $10,000. Depreciation would be based on the MACRS 3 years class; so the applicable rates would be 33%, 45%, 15%, and 7%. Variable cost would be 70% of sales revenue, fixed cost excludig depreciation would be $30,000 per year. the marginal tax rate is 40%. the corporate WACC is 11%. What is the required investment, theyear 0 project cash flow? whar are the annual depreciation charges? what are the prjects annual net cash flows? what is the NPV? what is the IRR? would you accept the project?

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Finance Basics: Whar are the annual depreciation charges what are the
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