Question

Gallatin, Inc., is considering an investment of $376,000 in an asset with an economic life of 5 years. The firm estimates that the nominal annual cash revenues and expenses at the end of the first year will be $256,000 and $81,000, respectively. Both revenues and expenses will grow thereafter at the annual inflation rate of 2 percent. The company will use the straight-line method to depreciate its asset to zero over five years. The salvage value of the asset is estimated to be $56,000 in nominal terms at that time. The one-time net working capital investment of $15,500 is required immediately and will be recovered at the end of the project. All corporate cash flows are subject to a 34 percent tax rate.
  
What is the project’s total nominal cash flow from assets for each year? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole dollar, e.g., 32.)
  

	Cash flow
Year 0		$
Year 0		$
Year 2		$
Year 3		$
Year 4		$
Year 5		$

Answer 1

Pls refer below table

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year	Revenue	Cost	Depreciation	PBT	Tax @ 34%	Net income	Depreciation	Operating cash flow	Workin capital	Investment	Total nominal cash flow
0									-15500	-376000	-391500
1	256000	81000	75200	99800	33932	65868	75200	141068			141068
2	261120	82620	75200	103300	35122	68178	75200	143378			143378
3	266342	84272	75200	106870	36335.8	70534.2	75200	145734.2			145734.2
4	271669	85958	75200	110511	37573.74	72937.26	75200	148137.26			148137.26
5	277103	87677	75200	114226	38836.84	75389.16	75200	150589.16	15500	36960	203049.16

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