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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?

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