Aug 10th, 2016
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A manufacturing company is thinking of launching a new product. The company expects to sell \$950,000 of the new product in the first year and \$1,500,000 each year thereafter. Direct costs including labor and materials will be 45% of sales. Indirect incremental costs are estimated at \$95,000 a year. The project requires a new plant that will cost a total of \$1,500,000, which will be a depreciated straight line over the next 5 years. The new line will also require an additional net investment in inventory and receivables in the amount of \$200,000. Assignment Guidelines Using the information in the assignment description: Prepare a statement showing the incremental cash flows for this project over an 8-year period. Calculate the payback period (P/B) and the net present value (NPV) for the project. Answer the following questions based on your P/B and NPV calculations: Do you think the project should be accepted? Why? Assume the company has a P/B (payback) policy of not accepting p

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A manufacturing company is thinking of launching a new product. The company expects to sell\$950,000 of the new product in the first year and \$1,500,000 each year thereafter. Direct costsincluding labor and materials will be 45% of sales. Indirect incremental costs are estimated at\$95,000 a year. The project requires a new plant that will cost a total of \$1,500,000, which willbe a depreciated straight line over the next 5 years. The new line will also require an additionalnet investment in inventory and receivables in the amount of \$200,000.Assume there is no need for additional investmen

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