Question

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.1 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $399,000 after 3 years. The project requires an initial investment in net working capital of $570,000. The project is estimated to generate $4,560,000 in annual sales, with costs of $1,824,000. The tax rate is 31 percent and the required return on the project is 15 percent. (Do not round your intermediate calculations.)

     

Required:
(a)	What is the project's year 0 net cash flow?
	(Click to select)-2,173,309-5,670,000-2,294,048-5,103,000-5,386,500

   

(b)	What is the project's year 1 net cash flow?
	(Click to select)2,656,2662,414,7872,294,0482,173,3092,535,527

  

(c)	What is the project's year 2 net cash flow?
	(Click to select)2,173,3092,535,5272,590,5942,720,1242,461,065

   

(d)	What is the project's year 3 net cash flow?
	(Click to select)3,238,6713,084,4482,930,2262,535,5272,776,003

  

(e)	What is the NPV?
	(Click to select)395,91411,183,623353,917416,751.43437,589

Answer 1