1. Tango Corporation is considering a new 3-year expansion project, which requires an initial fixed asset investment of $2,400. The fixed asset will be depreciated straight-line to zero over its 3-year tax life. The fixed asset will have a salvage value of $400 at the end of the project. The estimated annual sales are $2,500 and the total annual cost (fixed and variable costs) is $1,200. The company estimate that it needs net working capital, which is equal to 10% of annual sales. The tax rate is 20%.

1a. Calculate the annual operating cash flow (OCF).

1b. Calculate the after-tax salvage value (ATSV).

1c. Calculate the investment needed for the net working capital (NWC) in Year 0. Show formulas and key steps.

1. Tango Corporation is considering a new 3 -year expansion project, which requires an initial fixed asset investment of $2,400. The fixed asset will be depreciated straight-line to zero over its 3-year tax life. The fixed asset will have a salvage value of $400 at the end of the project. The estimated annual sales are $2,500 and the total annual cost (fixed and variable costs) is $1,200. The company estimate that it needs net working capital, which is equal to 10% of annual sales. The tax rate is 20%. 1a. Calculate the annual operating cash flow (OCF). 1b. Calculate the after-tax salvage value (ATSV). 1c. Calculate the investment needed for the net working capital (NWC) in Year 0. Show formulas and key steps