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Um dolor sit amet, consectetur adipiscing elit. You can submit your answer in one excel file in this question or in one excel file with all long answer Show all your work, including any schedules and Round all dollar amounts to the nearest dollar. Assume the risk profile of the proposal is the sameīased on the NPV method, should FFF go ahead with the new equipment? Value of the equipment will be $350,000 in four years. The new equipment will have aĬCA rate of 20% and there will be other assets in this class when the project ends in four years.
FFF WACC is 15% and their marginal tax rate is 38%. Product will be $12,000,000 per year with COGS estimated at 75% of sales. All other assets of the company are remaining the same. This new equipment will require an increase in inventory of $50,000įrom day one of the proposal. FFF is also planning to throw a big celebration if the The investment is for new equipment to build a new snack with a
Frank's Food Frenzy (FFF) has asked you to make a recommendation for an investment proposal they haveīeen looking at and trying to decide on.
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