7) Consider the following the forecasted balance sheet values of working capital for a project:

Year 0 Year 1 Year 2 Year 3 Year 4

Cash $5.28 $10.89 $14.00 $14.00 $15.03

Accounts Receivable $21.83 $24.59 $25.00 $22.00 $23.00

Inventory $4.92 $8.00 $11.00 $13.00 $14.60

Accounts Payable $17.79 $21.53 $23.00 $26.00 $30.48

a) What is the investment in NWC for year 0? (express as a positive number)

b)What is the investment in NWC for year 1? (express as as positive number)

c)What is the cash flow from NWC for year 1? (Note: If the firm invests money in NWC, this will be a negative number)

d) Suppose that the firm will reclaim 80% of its final NWC at the end of the project. What cash flow does this create for the firm?

11) A firm's net working capital is proportional to its sales. Historically, inventory is 10.00% of sales, accounts receivable is 20.00% of sales, and accounts payable is 12.00% of sales. Below, we have the sales forecast for the upcoming four years: (in millions)

Year 0 Year 1 Year 2 Year 3 Year 4

Sales $5.25 $9.87 $14.74 $17.75 $19.00

a) What will be the balance sheet value of NWC for year 1? (answer in terms of millions, x.xx million)

b)What will be the investment in NWC for year 1? (answer in terms of millions. Answer will be a positive number)

c)What will be the balance sheet value of NWC for year 2? (answer in terms of millions)

d)What will be the investment in NWC for year 2? (answer in terms of millions, xx.xx million)

24) Steamboat Springs Furniture, Inc., is considering purchasing a new finishing lathe that costs $57,509.00. The lathe will generate revenues of $97,200.00 per year for five years. The cost of materials and labor needed to generate these revenues will total $51,645.00 per year, and other cash expenses will be $11,005.00 per year. The machine is expected to sell for $9,247.00 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Steamboat Springs' marginal tax rate is 35.00 percent, and its cost of capital is 12.00 percent.

a) What is the project cash flow for the first year of the project?

b) What is the project cash flow for the second year?

c) What is the project cash flow for the last year of the project? (HINT: Add project cash flow plus the terminal value)

d) What is the NPV of the project?