![]() ![]() Note: Assume that the equipment is put into use in year 1. (*) The opportunity cost must be after-tax. Calculate the free cash flows and determine the NPV of this project. Apple's discount rate for this project is 15.2% and its tax rate is 35%. They will remain at the elevated level until year 4, when they will return to $118.3 million. Finally, Apple's working capital levels will increase from their current level of $118.3 million to $136 million immediately. Appleās computerized glasses will be as powerful as its Mac computers and launch at the end of 2022, top analyst Ming-Chi Kuo of TFI Asset Management said in a note to. As the iGlasses are an outcome of the R&D center, Apple plans to charge $5 million of the annual costs of the center to the iGlasses product for four years. Additionally, you will use some fully depreciated existing equipment that has a market value of $10.4 million. You will need to spend $55.4 million immediately on additional equipment that will be depreciated using the 5-year MACRS schedule. ![]() Revenues are projected to be $449.9 million per year along with expenses of $347.4 million. You think that these will sell for five years until the next big thing comes along (or until users are unable to interact with actual human beings). i Glasses will instantly transport the wearer into the world as Apple wants him to experience it: iTunes with the wink of an eye and apps that can be activated just by looking at them. After toiling away on $9.6 million worth of prototypes, you have finally produced your answer to Google Glasses: iGlasses (the name alone is genius). ![]()
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