# Aero Motorcycles is considerin

Aero Motorcycles is considering opening a new manufacturing facility in Fort Worth to meet the demand for a new line of solar-charged motorcycles (who wants to ride on a cloudy day anyway?) The proposed project has the following features;

• The firm just spent \$300,000 on a marketing study to determine consumer demand (@ t=0).

• Aero Motorcycles purchased the land the factory will be built on 5 years ago for \$2,000,000 and owns it outright (that is, it does not have a mortgage).

The land has a current market value of \$2,913,027.

• The project has an initial cost of \$20,000,000 (excluding land, hint: the land is not subject to depreciation).

• If the project was undertaken, at t = 0 the company will need to increase its inventories by \$3,500,000, accounts receivable by \$1,500,000, and its accounts payable by \$2,000,000. This net operating working capital will be recovered at the end of the project’s life (t =10).

• If the project is undertaken, the company will realize an additional \$8,000,000 in sales over each of the next ten years.(i.e. sales in each year are \$8,000,000)

• The company’s operating cost (not including depreciation) will equal 50% of sales.

• The company’s tax rate is 35 percent.

• Use a 10-year straight-line depreciation schedule.

• At t = 10, the project is expected to cease being economically viable and the factory(including land) will be sold for \$4,500,000 (assume land has a book value equal to the original purchase price).

• The project’s WACC = 10 percent •

Assume the firm is profitable and able to use any tax credits (i.e. negative taxes). What is the project’s NPV? Round to nearest whole dollar value.

# Aero Motorcycles is considerin

Aero Motorcycles is considering opening a new manufacturing facility in Fort Worth to meet the demand for a new line of solar-charged motorcycles​ (who wants to ride on a cloudy day​ anyway?) The proposed project has the following​ features;​• The firm just spent​ \$300,000 for a marketing study to determine consumer demand​ (@ t=0).​• Aero Motorcycles purchased the land the factory will be built on 5 years ago for​ \$2,000,000 and owns it outright​ (that is, it does not have a​ mortgage). The land has a current market value of​ \$2,600,000.​• The project has an initial cost of​ \$20,000,000 (excluding​ land, hint: the land is not subject to​ depreciation).​• If the project is​ undertaken, at t​ = 0 the company will need to increase its inventories by​ \$3,500,000, accounts receivable by​ \$1,500,000, and its accounts payable by​ \$2,000,000. This net operating working capital will be recovered at the end of the​ project’s life​ (t =​ 10).​• If the project is​ undertaken, the company will realize an additional​ \$8,000,000 in sales over each of the next ten years.​ (i.e. sales in each year are​ \$8,000,000)​• The company’s operating cost​ (not including​ depreciation) will equal​ 50% of sales.​• The company’s tax rate is 35 percent.​• Use a​ 10-year straight-line depreciation schedule.​• At t​ = 10, the project is expected to cease being economically viable and the factory​ (including land) will be sold for \$4,500,000 (assume land has a book value equal to the original purchase​ price).​• The project’s WACC​ = 10 percent​• Assume the firm is profitable and able to use any tax credits​ (i.e. negative​ taxes).What is the operating cash flow​ @ t=1?  Round to nearest whole dollar value.What is the operating cash flow​ @ t=2?  Round to nearest whole dollar value.What are the after tax proceeds from the sale of the factory​ (i.e., ATSV)?  Round to nearest whole dollar value.What is the total cash flow at​ t=10? Round to nearest whole dollar value.What is the​ project’s NPV?  Round to nearest whole dollar value. please provide the steps.

# Aero Motorcycles is considerin

Aero Motorcycles is considering opening a new manufacturing facility in Fort Worth to meet the demand for a new line of solar-charged motorcycles​ (who wants to ride on a cloudy day​ anyway?) The proposed project has the following​ features;
​• The firm just spent​ \$300,000 for a marketing study to determine consumer demand​ (@ t=0).
​• Aero Motorcycles purchased the land the factory will be built on 5 years ago for​ \$2,000,000 and owns it outright​ (that is, it does not have a​ mortgage). The land has a current market value of​ \$2,600,000.
​• The project has an initial cost of​ \$20,000,000 (excluding​ land, hint: the land is not subject to​ depreciation).
​• If the project is​ undertaken, at t​ = 0 the company will need to increase its inventories by​ \$3,500,000, accounts receivable by​ \$1,500,000, and its accounts payable by​ \$2,000,000. This net operating working capital will be recovered at the end of the​ project’s life​ (t =​ 10).
​• If the project is​ undertaken, the company will realize an additional​ \$8,000,000 in sales over each of the next ten years.​ (i.e. sales in each year are​ \$8,000,000)
​• The company’s operating cost​ (not including​ depreciation) will equal​ 50% of sales.
​• The company’s tax rate is 35 percent.
​• Use a​ 10-year straight-line depreciation schedule.
​• At t​ = 10, the project is expected to cease being economically viable and the factory​ (including land) will be sold for \$4,500,000 (assume land has a book value equal to the original purchase​ price).
​• The project’s WACC​ = 10 percent
​• Assume the firm is profitable and able to use any tax credits​ (i.e. negative​ taxes).
What are the after tax proceeds from the sale of the factory​ (i.e., ATSV)?  Round to nearest whole dollar value.

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