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Infomercial Entertainment, Inc

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Infomercial Entertainment, Inc
Infomercial Entertainment, INC Project Appraisals Depreciation Rates of MACRS | Year | Recovery Percentage | 1 | 20% | 2 | 32% | 3 | 19% | 4 | 12% | 5 | 11% | 6 | 6% |
Question 1

Infomercial Project
Selling Price of Infomercial $10
Total Production of 1993 (Units) 5000
Production Cost (%age of SP) 50%
Labor Cost (%age of SP) 12%
Sales Growth Rate per Year 5%
Working Capital Required $10,000
Initial Cost of Equipment $200,000
Delivery Cost $25,000
Total Cost of Equipment $225,000
Equipment Scrap Value $20,000

Official Year Project Year | 19920 | 19931 | 19942 | 19953 | 19964 | 19975 | 19986 | 19997 | 20008 | 20019 | 200210 | Production | | 5,000 | 5,250 | 5,513 | 5,788 | 6,078 | 6,381 | 6,700 | 7,036 | 7,387 | 7,757 | Sales | | 50,000 | 52,500 | 55,125 | 57,881 | 60,775 | 63,814 | 67,005 | 70,355 | 73,873 | 77,566 | Less Production Cost | | 25,000 | 26,250 | 27,563 | 28,941 | 30,388 | 31,907 | 33,502 | 35,178 | 36,936 | 38,783 | Less Labor Cost | | 6,000 | 6,300 | 6,615 | 6,946 | 7,293 | 7,658 | 8,041 | 8,443 | 8,865 | 9,308 | Less Deprecation | | 45,000 | 72,000 | 42,750 | 27,000 | 24,750 | 13,500 | 0 | 0 | 0 | 0 | Net Income | | (26,000) | (52,050) | (21,803) | (5,005) | (1,655) | 10,749 | 25,462 | 26,735 | 28,072 | 29,475 | Taxes | | (9,100) | (18,218) | (7,631) | (1,752) | (579) | 3,762 | 8,912 | 9,357 | 9,825 | 10,316 | NOPAT | | (16,900) | (33,832) | (14,172) | (3,253) | (1,076) | 6,987 | 16,550 | 17,378 | 18,247 | 19,159 |
FREE CASH FLOWS Official Year Project Year | 19920 | 19931 | 19942 | 19953 | 19964 | 19975 | 19986 | 19997 | 20008 | 20019 | 200210 | NOPAT | | (16,900) | (33,832) | (14,172) | (3,253) | (1,076) | 6,987 | 16,550 | 17,378 | 18,247 | 19,159 | Add Depreciation | | 45,000 | 72,000 | 42,750 | 27,000 | 24,750 | 13,500 | 0 | 0 | 0 | 0 | Free Cash Flows for the year | | 28,100 | 38,168 | 28,578 | 23,747 | 23,674 | 20,487 | 16,550 | 17,378 | 18,247 | 19,159 |
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