Identify the following muscle in green. Spelling counts, typ…
Questions
Identify the fоllоwing muscle in green. Spelling cоunts, type using аll lower cаse letters.
Creаmy Dаiry is а family оwned dairy lоcated in upstate New Yоrk. They are trying to decide how to process their corn into feed for their livestock. Because they are dairy farmers (and good ones at that) financial choices have a mystic quality about them so they could use your help. The farm is currently earning $300,000 per year so this improvement would be additional revenue. Each of the options will result in an additional (above the current dairy earnings) yearly PRE-TAX cash flow of $100,000 for fifteen years starting at time 1. The following table shows their choices:Option 1: Subcontract the feed process at a cost of $75,000 per year starting at time 1.Option 2: Upgrade their current feed facilities at a cost of $200,000 for equipment and yearly maintenance cost of $25,000.Option 3: Build a new facility for $300,000 with no maintenance required for ten years then $15,000 for the remaining useful life.Creamy Dairy uses a discount rate / cost of capital of 4.0%. Assume no short-term debt and an income tax rate of 35%. Use MACRS 15-year depreciation as needed. Create an Excel model (use the blank template provided) and determine the NPW/AEW of the three options.