Intel is considering making a new investment of $ 1000 in a new chip producing...
80.2K
Verified Solution
Link Copied!
Question
Accounting
Intel is considering making a new investment of $ 1000 in a new chip producing facility and has come with the following estimated revenues are 1250 , operating expenses 800, depreciation $250 per year. The project will end after four years, the marginal tax rate is 40% and the cost of capital for Intel is 0.08.
Estimate the initial investment.
Answer for part 1
Estimate the annual after-tax cash flow to the firm to Intel on this investment. (You have to do it only once, since the cash flows are the same every year)
Answer for part 2
Estimate the net present value of this project.
Answer for part 3
Now assume that this project will require Intel to maintain working capital at 20% of revenues occurring at the beginning of each year and the working capital being recovered at the end. Estimate the new initial investment.
Answer for part 4
Estimate the net present value of the project with the working capital.
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
