1: what is the cash flow from assets in year 0? Choose the right sign.

2: what is the cash flow from assets in year 1?

3: what is the cash flow from assets in year 2?

4: what is the cash flow from assets in year 3? hint add the recovery of net working capital.

5: what is the NPV of this project?

Intro DeLuxe Furniture is thinking of buying a wood cutting machine for $190,000 that would save it $35,000 per year in production costs. The savings would be constant over the project's 3-year life. The machine is to be linearly depreciated to zero and will have no resale value after 3 years. The machine would require an additional $8,000 in net working capital. The appropriate cost of capital for this project is 16% and the company's tax rate is 35%. Year 0 Year 1 Year 2 Year 3 0 35,000 35,000 0 63,333 63,333 0-28,333 -28,333 35,000 63,333 -28,333 Cost savings Depreciation EBIT Taxes (35%) Net income Depreciation OCE NCS ANWC CFA