Question

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $4.9 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $378,000 after 3 years. The project requires an initial investment in net working capital of $540,000. The project is estimated to generate $4,320,000 in annual sales, with costs of $1,728,000. The tax rate is 31 percent and the required return on the project is 10 percent. (Do not round your intermediate calculations.)

    

Required:
(a)	What is the project's year 0 net cash flow?
	(Click to select)-5,168,000-2,065,286-4,896,000-5,440,000-2,180,025

   

(b)	What is the project's year 1 net cash flow?
	(Click to select)2,524,2392,065,2862,409,5012,294,7632,180,025

  

(c)	What is the project's year 2 net cash flow?
	(Click to select)2,586,8592,409,5012,340,4922,065,2862,463,676

  

(d)	What is the project's year 3 net cash flow?
	(Click to select)3,073,1632,409,5012,634,1402,926,8222,780,481

  

(e)	What is the NPV?
	(Click to select)881,207.911,146,861925,268837,148734,974

Answer 1