Question

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.238 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 $407,400. 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 30 percent and the required return on the project is 17 percent.

  

Required:
(a)	What is the project's year 0 net cash flow?
	(Click to select)-5,529,000-6,402,000-6,111,000-5,238,000-5,820,000

  

(b)	What is the project's year 1 net cash flow?
	(Click to select)2,355,3542,479,3202,727,2522,603,2862,231,388

  

(c)	What is the project's year 2 net cash flow?
	(Click to select)2,231,3882,355,3542,479,3202,727,2522,603,286

  

(d)	What is the project's year 3 net cash flow?
	(Click to select)3,681,1503,346,5003,011,8503,179,1753,513,825

  

(e)	What is the NPV?
	(Click to select)199,710240,268-910,4192,224,438209,695

Answer 1