Aunt Sally's Sauces Inc. is considering expansion into a new line of all-natural, cholesterol-free, sodium-free, fat-free, low-calorie tomato sauces. Sally has paid $50,00 for a marketing study which indicates that new product line would have sales of $650,000 per year for each of the next six years. Manufacturing plant and equipment would cost $500,000 and will be depreciate according to ACRS as a five-year asset. The fixed assets will have no market value at the end of six years. Annual fixed costs are projected at $80,000 and variable costs are projected at 60% of sales. Net working capital requirement are $75,000 for te six-years life of the project; the outlay for working capital will be recovered at the end of six year. Aunt Sally's tax rate is 34% and the firm requires 16% return.
Please help me setup these questions(answers are not important0
Compute the annual depreciation and ending book value for the fixed asset.
Prepare pro forma income statement for the project for years 1 through
Compute operating cash flow for the project years 1 through 6
Compute present value and the internal rate or return for the new product ine
