!4) You are opening your own business and estimate the following expenses and revenues:

Year 1 Year 2 Year 3

Revenues $900,000 $1,300,000 $1,100,000

Cost of goods sold $550,000 $800,000 $700,000

Accounts payable as a percentage of cost of goods sold..11%

Inventory as a percentage of cost of goods sold...13%

Cash balance as a percentage of revenues....8%

Accounts receivables as a percentage of revenues...15%

Accrued expenses as a percentage of revenues....9%

All balances are needed in the year prior to the generation of the revenue and expense.

Please calculate the incremental investment in working capital needed for years 0,1,2,3. (you do not need to calculate the cash flow from operations you do not have enough information to do this only the incremental investment in working capital all working capital accounts are liquidated at book value at the end of year 3)

Year 0_______________ Year 1_______________ Year 2__________________ and Year 3______________

Please use the following information to answer the remaining problems:

Able Corporation has Project A with the following cash flows and a 7.7% cost of money: Numbers in parentheses are outflows. Both Year 0 and Year 3 cash flows are outflows.

Year	0	1	2	3	4	5	6
Cash flow	$(321,000)	$ 95,000	$120,000	$(260,000)	$ 230,000	$260,000	$180,000

15) Please calculate the net present value ______________

16) Please calculate the profitability indexes (two decimals please)_________________

17) Please calculate the modified profitability index using the terminal value approach in the textbook (two decimals please)_______________________

18) Please calculate the internal rate of return (two decimals please)_____________________________

19) Please calculate the modified internal rate of return (two decimals please and per the book)________________________

20) Please calculate the payback period (two decimals please)________________________

21) Please calculate the present value payback period (two decimals please)______________________

22) You are opening your own business and estimate the following expenses and revenues:

Revenues year 1 $210,000 growing at 9% thereafter

Cost of goods sold year 1 $121,000 growing at 10% thereafter

Operating expense year 1 $47,000 growing at 6% thereafter

Taxes all in years 27% per year

Depreciation $15,000 in year 1, $21,000 in year 2, $17,000 in year 3

No working capital is needed -- please predict the after-tax cash flows from operations for the first three years of operations below:

Year 1_______________ Year 2__________________ and Year 3______________