Please refer to the attached worksheet for Bwainey, Inc.? Utilize the incremental changes presented and the assumptions detailed in the far right column.? Please update your worksheet as you go.
- Calculate incremental depreciation expense generated by the project for years 1 through 4.? Assume straight line with no salvage value.? (.5)
- Calculate the depreciation tax shield for years 1 through 4 (.5)
- Calculate the annual free cash flow generated by the project for years 1 through 4.? (.5)
- Assuming an annual discount rate of 6%, please provide the net present value of the project. (.5)
- Should the project be done or not? (1)
Now FYE 2017 Incremental Changes to the Income Statement
- FYE 2018 FYE 2019 FYE 2020 75.00
15.00 5.00 7.00
### (5.00) 8.00 8.00 8.00 8.00 Income Tax 1.75 (2.80) (2.80) (2.80) (2.80) Net Income (3.25) 5.20 5.20 5.20 5.20 Incremental Changes to the Balance Sheet
Inc. in Net Working Capital
- 5.00 ###
3.00 2.00 ###
1.00 Operating Expenses
EBIT Assumption Incremental sales from the sale of Bwainey Bits. Assume each FYE period is for equal 12 month periods folling the p
Estimated incremental costs from the sale of Bwainey Bits. Up front R&D followed by incremental operating expenses.
Incremental depreciation of equipment over 4 year life. No salvage of scrap value. (Please insert.) Incremental income taxes based on 35% marginal tax rate. Initial investment in equipment. No salvage value.
Annual expected increase in net working capital g the project start date
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