3 year project

Initial Fixed Investment = 2,900,000

Nonrefundable R&D = 100,000

Depreciation: 3 Year MACRS Schedule (33.33%, 44.45%, 14.81%, 7.41%)

Annual Sales = 2,737,500  (20% from existing products)

Annual Costs = 815,000

Initial NWC Investment = 300,000

Additional NWC Investment = 100,000 per year

Fixed Market Value of 210,000 at the end of the project

Tax Rate = 21%

Required Return = 12%

Find the following:

a. Year 0 Net Cash Flow

b. Year 1 Operating Cash Flow

c. Year 1 Net Cash Flow

d. Year 2 Net Cash Flow

e. Year 3 Net Cash Flow

f. NPV of Project