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Under the assumption that Ideko market share will increase by 0.5% per year, you determine that the plant will require an expansion in 2010

Under the assumption that Ideko market share will increase by 0.5% per year, you determine that the plant will require an expansion in 2010
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FINANCE

3. Under the assumption that Ideko market share will increase by 0.5% per year, you determine that the plant will require an expansion in 2010. The cost of this expansion will be $15 million. Assuming the financing of the expansion will be delayed accordingly, calculate the projected interest payments and the amount of the projected interest tax shields (assuming that the interest rates on the term loans remain the same as in the chapter) through 2010.

4. Under the assumption that Ideko’s market share will increase by 0.5% per year (and the investment and financing will be adjusted as described in Problem 3), you project the following depreciation:

Year 2005 2006 2007 2008 2009 2010
Fixed Assets and Capital Investment ($ 000)
2. New Investment 5,000 5,000 5,000 5,000 5,000 20,000
3. Depreciation (5,500) (5,450) (5,405) (5,365) (5,328) (6,795)

Using this information, project net income through 2010 (that is, reproduce Table 19.7 under the new assumptions).

 

FILE: MS WORD

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