Question
In: Finance
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...
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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 |
Solutions
jeff jeffy answered 2 years 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...
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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...
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The fixed asset falls into the 3-year MACRS class (MACRS Table) and
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