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[answered] Bwainey, Inc. Now FYE 2017 Incremental Changes to the Incom


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)

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  • Calculate the depreciation tax shield for years 1 through 4 (.5)

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  • Calculate the annual free cash flow generated by the project for years 1 through 4.? (.5)

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  • Assuming an annual discount rate of 6%, please provide the net present value of the project. (.5)

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  • Should the project be done or not? (1)

Bwainey, Inc.

 

Now FYE 2017 Incremental Changes to the Income Statement

 

Sales

 

COGS

 

Gross Profit

 

- FYE 2018 FYE 2019 FYE 2020 75.00

 

60.00

 

15.00 75.00

 

60.00

 

15.00 75.00

 

60.00

 

15.00 75.00

 

60.00

 

15.00 5.00 7.00

 

- 7.00

 

### 7.00

 

- 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

 

Capital Expenditures

 

12.00

 

Inc. in Net Working Capital

 

- 5.00 ###

 

3.00 2.00 ###

 

1.00 Operating Expenses

 

Depreciation

 

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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