2. A firm's evolution to a multinational conglomerate like Nestlé's often comes at a cost. What has Nestlé's lost in its pursuit for profits?
2. A firm's evolution to a multinational conglomerate like Nestlé's often comes at a cost. What has Nestlé's lost in its pursuit for profits?
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| Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.67 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,070,000 in annual sales, with costs of $767,000. The project requires an initial investment in net working capital of $290,000, and the fixed asset will have a market value of $265,000 at the end of the project. |
| If the tax rate is 34 percent and the required return is 13 percent, what is the projectâs Year 1 net cash flow? Year 2? Year 3? (Use MACRS) |
Raphael Restaurant is considering the purchase of a $9,300 soufflé maker. The soufflé maker has an economic life of four years and will be fully depreciated by the straight-line method. The machine will produce 1,650 soufflés per year, with each costing $2.10 to make and priced at $4.90. Assume that the discount rate is 14 percent and the tax rate is 34 percent. What is the NPV of the project?
