Use the Information for the Question(s)below

question 81

Essay

Use the information for the question(s)below.
The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years.The cost of the machine is $30,000 and the machine will be depreciated straight line over its three-year life to a residual value of $0.
The cane manufacturing machine will result in sales of 2000 canes in year 1.Sales are estimated to grow by 10% per year each year through year three.The price per cane that Sisyphean will charge its customers is $18 each and is to remain constant.The canes have a manufacturing cost of $9 each.
Installation of the machine and the resulting increase in manufacturing capacity will require an increase in various net working capital accounts.It is estimated that the Sisyphean Corporation needs to hold 2% of its annual sales in cash,4% of its annual sales in accounts receivable,9% of its annual sales in inventory,and 6% of its annual sales in accounts payable.The firm is in the 21% tax bracket,and has a cost of capital of 10%.
-Construct a simple income statement showing the incremental EBIT and the incremental unlevered net income for all three years of the Sisyphean Corporation's project.

---

Definitions:

Negotiating Parties

are the individuals or groups involved in a negotiation process, each with their own interests and objectives.

Well-Organized Audiences

Groups of people who are arranged or structured efficiently, often in the context of attending or participating in specific events.

Significant Effect

An impact or change that is large enough to be noticed or considered important.

Unfavorable Effects

Undesired or negative consequences resulting from a particular action or event.