In the previous problem, suppose the project requires an initial investment in net working capital of $275,000 and the fixed asset will have a market value of $325,000 at the end of the project. What is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? What is the new NPV?

Data from problem 9

In the previous problem, suppose the required return on the project is 15 percent. What is the project’s NPV?

Data from problem 10

Bush Boomerang, Inc., is considering a new three year expansion project that requires an initial fixed asset investment of $2.1 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1,900,000 in annual sales, with costs of $850,000. If the tax rate is 35 percent, what is the OCF for this project?