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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%.
-Calculate the total Free Cash Flows for each of the three years for the Sisyphean Corporation's new project.
Distribution
The process of distributing electrical energy from the transmission system to the end users or consumers effectively.
Isolation
The process or condition of separating or being separated from a system or environment, often for safety, such as electrical isolation to prevent shock.
Turns Ratio
The ratio of the number of turns in the primary winding of a transformer as compared to the turns of wire in the secondary winding.
Secondary Voltage
The output voltage of a transformer or another type of electrical machine, which is induced by the primary voltage.
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