Question
44. Middlefield Motors is evaluating project Z. The project would require an initial investment of 71,500 dollars that would be depreciated to 11,500 dollars over
44. Middlefield Motors is evaluating project Z. The project would require an initial investment of 71,500 dollars that would be depreciated to 11,500 dollars over 7 years using straight-line depreciation. The project is expected to have operating cash flows of 28,000 dollars per year forever. Middlefield Motors expects the project to have an after-tax terminal value of 350,500 dollars in 4 years. The tax rate is 35 percent. What is (X+Y)/Z if X is the projects relevant expected cash flow in year 4, Y is the projects relevant expected cash flow in year 5, and Z is the projects relevant expected cash flow in year 3? Round your answer to 2 decimal places (for example, 2.89, 0.70, or 1.00).
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