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In: Finance
Summer Tyme plc is considering a new three-year expansion project that requires an initial non-current asset...
Summer Tyme plc is considering a new three-year expansion project that requires an initial non-current asset investment of £3.9 million. The non-current asset actually is depreciated straight line to zero over the three years of the project. The project is estimated to generate £2,650,000 in annual sales, with costs of £835,000.Suppose the required return on the project is 13 per cent, the project requires an initial investment in net working capital of £300,000, the tax rate is 27 per cent and the non-current asset actually is depreciated straight-line to zero over the three years of the project. What is the project’s year 1 net cash flow? What is the project’s year 2 net cash flow? What is the project’s year 3 net cash flow? What is the project`s NPV?
( Should we consider net working capital in net cash flow year 3?
Solutions
jeff jeffy answered 3 months agoRelated Solutions
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...
Summer Tyme, Inc., is considering a new 3-year expansion project
that requires an initial fixed asset investment of $5.9 million.
The fixed asset falls into the 3-year MACRS class (MACRS Table) and
will have a market value of $462,000 after 3 years. The project
requires an initial investment in net working capital of $660,000.
The project is estimated to generate $5,280,000 in annual sales,
with costs of $2,112,000. The tax rate is 34 percent and the
required return on the...
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...
Summer Tyme, Inc., is considering a new 3-year expansion project
that requires an initial fixed asset investment of $4.59 million.
The fixed asset will be depreciated straight-line to zero over its
3-year tax life, after which time it will have a market value of
$357,000. The project requires an initial investment in net working
capital of $510,000. The project is estimated to generate
$4,080,000 in annual sales, with costs of $1,632,000. The tax rate
is 30 percent and the required...
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...
Summer Tyme, Inc., is considering a new 3-year expansion project
that requires an initial fixed asset investment of $5.076 million.
The fixed asset will be depreciated straight-line to zero over its
3-year tax life, after which time it will have a market value of
$394,800. The project requires an initial investment in net working
capital of $564,000. The project is estimated to generate
$4,512,000 in annual sales, with costs of $1,804,800. The tax rate
is 33 percent and the required...
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...
Summer Tyme, Inc., is considering a new 3-year expansion project
that requires an initial fixed asset investment of $6.4 million.
The fixed asset falls into the 3-year MACRS class (MACRS Table) and
will have a market value of $499,800 after 3 years. The project
requires an initial investment in net working capital of $714,000.
The project is estimated to generate $5,712,000 in annual sales,
with costs of $2,284,800. The tax rate is 33 percent and the
required return on the...
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...
Summer Tyme, Inc., is considering a new 3-year expansion project
that requires an initial fixed asset investment of $5.2 million.
The fixed asset falls into the 3-year MACRS class (MACRS Table) and
will have a market value of $403,200 after 3 years. The project
requires an initial investment in net working capital of $576,000.
The project is estimated to generate $4,608,000 in annual sales,
with costs of $1,843,200. The tax rate is 35 percent and the
required return on the...
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...
Summer Tyme, Inc., is considering a new 3-year expansion project
that requires an initial fixed asset investment of $6.4 million.
The fixed asset falls into the 3-year MACRS class (MACRS Table) and
will have a market value of $499,800 after 3 years. The project
requires an initial investment in net working capital of $714,000.
The project is estimated to generate $5,712,000 in annual sales,
with costs of $2,284,800. The tax rate is 33 percent and the
required return on the...
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...
Summer Tyme, Inc., is considering a new 3-year expansion project
that requires an initial fixed asset investment of $3.726 million.
The fixed asset will be depreciated straight-line to zero over its
3-year tax life, after which time it will have a market value of
$289,800. The project requires an initial investment in net working
capital of $414,000. The project is estimated to generate
$3,312,000 in annual sales, with costs of $1,324,800. The tax rate
is 30 percent and the required...
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...
Summer Tyme, Inc., is considering a new 3-year expansion project
that requires an initial fixed asset investment of $5.2 million.
The fixed asset falls into the 3-year MACRS class (MACRS Table) and
will have a market value of $407,400 after 3 years. The project
requires an initial investment in net working capital of $582,000.
The project is estimated to generate $4,656,000 in annual sales,
with costs of $1,862,400. The tax rate is 33 percent and the
required return on the...
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...
Summer Tyme, Inc., is considering a new 3-year expansion project
that requires an initial fixed asset investment of $6.1 million.
The fixed asset falls into the 3-year MACRS class (MACRS Table) and
will have a market value of $474,600 after 3 years. The project
requires an initial investment in net working capital of $678,000.
The project is estimated to generate $5,424,000 in annual sales,
with costs of $2,169,600. The tax rate is 31 percent and the
required return on the...
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...
Summer Tyme, Inc., is considering a new 3-year expansion project
that requires an initial fixed asset investment of $5.616 million.
The fixed asset will be depreciated straight-line to zero over its
3-year tax life, after which time it will have a market value of
$436,800. The project requires an initial investment in net working
capital of $624,000. The project is estimated to generate
$4,992,000 in annual sales, with costs of $1,996,800. The tax rate
is 33 percent and the required...
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