Question
In: Finance
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 $1.6 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $126,000 after 3 years. The project requires an initial investment in net working capital of $180,000. The project is estimated to generate $1,440,000 in annual sales, with costs of $576,000. The tax rate is 34 percent and the required return on the project is 10 percent. (Do not round your intermediate calculations.)
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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.6 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $126,000 after 3 years. The project requires an initial investment in net working capital of $180,000. The project is estimated to generate $1,440,000 in annual sales, with costs of $576,000. The tax rate is 34 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? |
| (b) | What is the project's year 1 net cash flow? |
| (c) | What is the project's year 2 net cash flow? |
| (d) | What is the project's year 3 net cash flow? |
| (e) | What is the NPV? |
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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