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question 46

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 cost per unit to manufacture 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 35% 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 Companies project.

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African Diseases

Refers to diseases that are prevalent or originate from Africa, many of which have significant impacts on public health and economies; examples include malaria, Ebola, and HIV/AIDS.

Yamasees

A Native American people originally from the southeastern United States, notable for their involvement in the Yamasee War against English colonists.

English Settlements

Colonies established by England in various parts of the world during the 17th and 18th centuries, particularly in North America.

South Carolina

A state in the southeastern United States, known for its shorelines, subtropical beaches, and historical significance in the American Civil War.